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Pension pots worth more than £31.1bn are lost to their owners, the Pensions Policy Institute has found in a report published ahead of National Pension Tracing Day on Sunday.
New research by the PPI suggests there are nearly 3.3m lost pensions pots in the UK, an increase of more than half a million. The value of lost pots is almost £5bn higher than in 2022.
The PPI said people at or near retirement – those aged 55-75 – own the largest pots of those lost, worth £13,620 on average, which could make a meaningful difference for their owners.
"This is significant because this group faces immediate adequacy concerns, and because they are close to retirement, there are relatively few other options for improving their retirement outcomes when compared to younger demographics,” the report reads. “It is therefore particularly important to reunite these pots with their owners as they may have a particularly significant impact on retirement outcomes.”
Among the 75+ group, the value of lost pots has reduced from £12,190 in 2022 to £6,540 in 2024. As much as 16% of customers over 75 are considered ‘gone away’ by providers, though the value of lost pots is thought to be just £0.5bn. In contrast 7% of under-55s are marked ‘gone away’, where as much as £17.6bn is estimated to be lost, the average value being £7,820.
The government and industry are currently working on initiatives that are anticipated help address the issue of lost pots, including auto-consolidation of pots worth less than £1,000 and pensions dashboards. However, neither of these programmes have a go-live date yet.
PPI policy analyst John Upton said the average size of a lost pot is now £9,470, adding: “Savers would not want to miss out on this money that they could use to improve their retirement.”
Head of public policy at investment platform AJ Bell, Rachel Vahey, said with people switching jobs and being auto-enrolled in each job, it was easy to see how some ended up losing track of their pension savings.
“Millions of people could be in danger of facing an incomplete picture when it comes to their long-term financial planning, potentially missing out on thousands of pounds of disconnected pension money,” Vahey said.
Helen Morrissey, head of retirement analysis at competitor Hargreaves Lansdown, noted that demand for the government’s Pension Tracing Service is growing: 31,505 calls made to the service between 1 January and 24 May this year, and 276,000 calls made since January 2019.
“It’s clearly needed but the reality is it’s barely scratching the surface of the problem,” she said.
The government’s work on small pots will help, but it will not deal with the issue of larger pots getting lost, she added.
She argued in favour of the lifetime provider model proposed under the previous government, saying a model in which instead of the employer picking a provider each saver chooses their own, “could help nip the issue in the bud”.
What can industry do to help people find pots while we wait for dashboards and auto-consolidation?
