Lost pension pots pass 3 million: Could one be yours?

Automatic enrolment has been one of the great public policy successes of recent decades, ensuring millions of employees are building at least some level of pension savings for retirement. But as people move jobs throughout their working lives, they often leave old workplace pensions behind, and over time it's easy to lose track of them.

The latest Pensions Policy Institute (PPI) research shows this remains a major issue, with more than three million pension pots now considered lost, with an average value of £6,220.

While the average pot value may not sound life-changing on its own, £6,000 can make a significant difference to someone's retirement income. That figure rises to £10,000 among those aged over 55 – people who will likely be thinking about retirement in the not-too-distant future – and that is just an average, meaning many will hold much larger forgotten sums.

How can you find a lost pension?

Customers using AJ Bell’s pension finding tool have tracked an average of £18,500 when adding up the combined value of pots found by each individual customer. Some have used the service to find and combine pots worth over £1 million.

If you think you might have lost a pension pot, and are an AJ Bell customer, you can use the pension finder tool for free to help locate them. We’ll ask for information like the names of your old employers and when you worked there and then get to work tracking them down. This system works for any employment after 1990, where you worked there for over three months (or two years if before 2000) and were over the age of 22 years old. We won’t be able to find any pensions from the public sector, or for places where you currently work.

The government can also help you track down contact details for a lost pension with its pensions tracing service. But it will not confirm if you have a pension there or how much money it holds, you’ll have to contact the provider yourself for that information once you have the contact details.

Who holds the most lost pensions?

Particularly striking is the fact that the vast majority of lost pensions are held by people under 55. Retirement may still feel like it is a long way off in your mid 50s but keeping track of your pensions is one of the most important steps you can take to stay in control of your long-term finances - and the sooner you can get in control, the better.

Once you’ve got a picture of your pension savings, you can decide if you need to start contributing more, as well as working out whether you might be better off switching to an account with lower costs, better service or investment choice, or a combination of all three.

Combining pensions isn’t necessarily the right move for everyone and savers should take the time to shop around for the right provider, taking into account factors such as charges, choice, flexibility and service. Some older-style pensions can have valuable guarantees attached that will be lost on transfer, so checking whether this is the case is also crucial. For those who aren’t sure, it may be worth speaking to a financial adviser or reading up free resources like those on Money Helper. Whether you ultimately decide to combine pensions or not, the first step is to get a handle on what you’ve got and where it is invested.

The government’s plan for lost pensions

Policymakers haven’t found any real answers to the challenge of lost pension pots. While the UK Pensions Dashboards Programme has potential to make a big difference, it’s yet to be released to the public. Steps have been taken by the government to hoover up the smallest pots worth less than £1,000 and consolidate them automatically, but that won’t really address the problem and only means the very smallest accounts being bundled up into a single scheme, which in and of itself won’t bring the saver any closer to a reunion with their forgotten pot.