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Recent statistics on Britons’ retirement savings have made for some fairly grim reading. A survey by the Financial Conduct Authority found that 41% of people have a Defined Contribution pension scheme, which is dependent on changes in the stock market with respect to how much will eventually be paid out. The survey also found that most people with this type of pension have very little in it – two fifths have less than £5,000. Which is why it’s especially surprising to find that many of us have “forgotten” pensions that are sitting unclaimed – currently to the tune of £19 billion!
On average we will have around eleven jobs throughout the course of a lifetime. We move jobs a lot more today than in years gone by and pensions that are set up for one job can be forgotten when we move onto the next. Many people don’t entirely forget but assume that a small pension from a shorter-term job is simply not going to be worth pursuing. However, if that pension was well invested that could be completely untrue – one woman who spoke to The Guardian newspaper said that an old pension she had traced out of interest was now worth £10,000.
Data on the large number of forgotten pensions comes from the Association of British Insurers. The ABI recently published a study indicating that there are currently some 1.6 million pension pots in the UK that have been forgotten about. Their total combined value could be as high as £19.4 billion. So, there is a significant volume of retirement income currently sitting unclaimed, which could be invaluable to those who don’t yet have enough for a comfortable life in those golden years.
You may be the type of person who has always kept scrupulous records of your finances and knows where all your retirement savings are. However, for many of us, especially where moving jobs has been fairly frequent, it’s highly likely that a few slipped through the cracks. So, what can you do to find any forgotten pensions that you might have and make sure that you benefit from them?
Pensions have changed significantly over the years and employers are now required to manage them differently, especially when it comes to exits. For example, if you left a pension scheme prior to 1975 it’s likely that any contributions you made while employed would have been refunded to you. If you made five years of contributions to a pension scheme between April 1975 and April 1988 – and you were over 26 at the time – then it’s highly likely you have a pension waiting for you. After 1988, if you completed two years in a scheme with an employer then you’re also likely to have a forgotten pension waiting to be found. If you do have a forgotten pension then it could transform your retirement prospects so it’s worth taking the time to investigate.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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