Over £26.6bn is sitting in unclaimed pension pots owned some 2.8 million savers across the UK as the financial regulator sets new rules for pension providers.
The number of lost pensions has jumped 75% to 2.8 million over the past four years, and they are now worth 37% more in total at £26.6bn – or £9,500 on average, according to figures from the Pensions Policy Institute (PPI).
Forgotten pensions are mainly caused by people forgetting about pots built up in previous jobs as well as those changing their name or moving house without telling their pension provider.
The government wants to tackle this and is set to launch a pensions dashboard that will eventually allow savers to see all their pensions in one place online.
Pensions dashboards will allow people to see information about all their pensions in one place. It will include all their private pensions, defined benefit or defined contribution, retail or workplace, old or new, as well as any public sector pensions and, importantly, their state pension as well.
The Financial Conduct Authority (FCA) this Tuesday published the final rules on pensions dashboards for pension providers.
Under this framework, FCA regulated pension providers must be answer requests to find pensions, and search records for data matches. Providers must also be able to return pensions information to the consumer’s chosen pensions dashboard.
The implementation deadline has been moved from 30 June 2023 to 31 August 2023.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Several years in gestation, today’s rules finally mean there is light at the end of the tunnel. That means more clarity for people who want to take control of their pensions – and that’s a game changer. The finer points of pensions dashboards initiative have now been set in stone, with an implementation date of 31 August 2023.
“Pensions dashboards have been long in the making and can’t come soon enough to help savers make better informed decisions regarding their retirement nest egg. It will encourage people to take a greater interest and ownership of their retirement plan, and potentially encourage people to shop around and consolidate into a better value product. Far too often, pensions plans are neglected and with every job change can all too easily end up in the rear view mirror, making them easier to lose track of.
In the meantime, savers can take steps to find their lost pension pot, ranging from retracing career steps, checking old papers, confirming that details are up to date, looking out for any gaps in their pension history, and reaching out to their pension provider.
The UK government’s Pension Tracing Service can also help find contact details for an old scheme.
Alice Guy, personal finance expert at Interactive Investor, added: “By making pensions clearer, the new pension dashboards will help people take charge of their financial future. They will be able to keep an eye on their pension wealth in one place and make sure they are on track for a comfortable retirement. The dashboards will also make it easier for people to spot confusing, rip-off pension charges and make sure they are getting a good deal.”
Watch: When should I start paying into a pension?