UK’s £20 BILLION ‘LOST pension mountain’ may never be claimed
It seems that the constant, overlooked mismanagement of pension appropriations can be a detrimental error that leads to large-scale catastrophe. Recently, an insurance industry body had estimated that a jaw-dropping 1.6 million lost pension pots worth almost £20 billion are being left unclaimed.
The reasons seem to vary. Savers may lose track of their individual pension stashes due to job changes or moving houses. This results in future retirees potentially missing out on unbelievable amounts supposedly set aside for their golden years.
The Association of British Insurers (ABI) gathered research indicating that approximately 800,000 pensions worth an estimated £9.7 billion had been lost.
Scaled up to the market as a whole, estimates appear even more dire with a collective approximate of 1.6 million pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pot.
According to ABI, the overall lost pensions figure may be even higher than this since research has not accounted for pensions lost from the public sector or with trust-based schemes typically run by employers.
So how exactly have these alarming figures come about? Well, these findings were gleaned on behalf of the ABI by the Pensions Policy Institute (PPI) by surveying firms that represented about half of the private defined contribution (DC) pensions market.
ABI’s director of long-term savings and protection, Yvonne Braun, had this to say about the findings: “These findings highlight the jaw-dropping scale of the lost pensions problem.
Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.”
“The industry has stepped up its efforts to re-connect savers with their lost nest eggs, developing a new framework launched earlier this year to help pension providers trace ‘gone-away’ customers more consistently.
“But industry efforts can only go so far – we need a radical digital solution to cope with the way society is changing, or the problem will get worse.
“It is important that the Government stands by its promises to take forward the pensions dashboard.
“This project has cross-party support, with the backing of consumer groups, and could mean a more secure retirement for millions of savers.”
There are ongoing efforts to help resolve this massive issue. Over 375,000 attempts to make contact with customers who had lost their pension pots were made in 2017. Fortunately, these customers have been reunited with about £1 billion in assets.
People are moving around too much, which is why ABI has suggested the development of a pensions dashboard which could grant people access to keep track of their pensions through an integrated online platform. This might be a vital step in maintaining and systemising how pension processes are carried out in the future, in order to reduce the number of lost pensions.