- Free pension finding service provides a hassle-free way to track down retirement savings
- Auto enrolment and increased job switching drives pension pot proliferation, with some customers finding as many as 11 separate pension pots
- On average customers find around £18,000 of pension savings, although one tracked nearly £1m of pension wealth
- The largest single pension pot found was worth over £750,000
- Average user is age 43, although the youngest person to find pensions using the tool was just 20, while the oldest was 87
Laura Suter, director of personal finance at AJ Bell, comments:
“There are 3.3 million ‘lost’ pension pots, according to the Pensions Policy Institute*. People can easily lose track of their pensions, often because they have moved jobs, lost paperwork or forgotten their pension existed. But what if you had 11 missing pension pots you could track down, or a pension worth nearly a million sitting there waiting to be found?
“That’s what some people discovered when using AJ Bell’s pension finding service. We delved into the data on people who had used the service to track down their lost accounts, and it proved lucrative work for many.”
How many pots do people find?
“AJ Bell helps people trace their pension accounts through an easy to use, free online tool.
“It’s common for people using the service to find multiple pension pots, with around a quarter tracking down three or more pension pots they could then combine into a single account, while the rest found one or two accounts.
“Remarkably, some customers were lucky enough to track down as many as 11 separate pensions in some cases.
“Auto enrolment has been a huge boost for the UK’s retirement savings, compelling employers to provide a workplace pension. But it also means there has been an explosion in the number of pension accounts people build up over their career.
“Although government is pressing ahead with measures to automatically consolidate millions of small pension pots worth £1,000 or less, this will only impact the very smallest pensions and will see pots automatically moved to a new provider. People with larger pensions, and those who want to choose their pension provider themselves, will still need to take control of the situation if they want to consolidate their pensions.”
How much could you find?
“Over the course of their career, people will often build up multiple pension accounts each worth several thousand pounds. Typically, a pension pot found via the service is worth just under £10,000, with people finding an average of nearly £18,500 in aggregate once they tot up the value of all the accounts they’ve found.
“Some find much bigger accounts, however, with the biggest single pension pot discovered worth over £750,000, while one customer found several pots worth almost £1 million combined.
Should you consider combining your pensions?
“There are plenty of reasons why combining your pensions with a single provider can be a good idea. Most obviously, a single retirement pot is much easier to track and manage than having various pensions with different providers. You could also benefit from lower costs and charges, increased income flexibility and more investment choice by switching provider.
“Older pension schemes, for example, often charge more than modern pensions, while plenty of workplace schemes don’t offer a full range of retirement income options or restrict your investments to the firm’s own in-house funds.
“While a charge cap of 0.75% applies to the default investment option in auto-enrolment workplace pensions today, many pension policies, including older contracts or those setup outside auto-enrolment, may carry higher fees.
“The impact of reducing your pension charges can be significant, particularly over the long term. Someone combining three pensions with charges of 1.5% to 0.75% could boost their pension pot by over £7,000 over 10 years or £20,000 over 20 years if they were to switch to a single, lower cost account (see table below).”
*Pensions Policy Institute, Briefing Note 138. The research looks at pension pots considered lost when the pension provider who administers it is unable to contact the saver. The Lost Pensions Surveys use the term “gone away” in the questionnaire.
