New research by wealth management group Tilney reveals the extent to which many peoples’ retirement preparations are in disarray, with nearly one in five UK adults admitting they have lost track of at least one pension pot.
The problem is exacerbated by changes in the employment market with few people now sticking to one job for life, meaning most of us end up with multiple pension plans. According to Tilney’s research, the average person has worked for 5.8 employers by the time they are over 55 but this is set to rise significantly as 18-34 year olds have already had, on average, over four jobs and even small businesses are now required under law to auto-enrol new staff into a workplace pension. Projections by the Department of Work & Pensions estimate that the average person will have 11 employers over their working lives.
Tilney’s research has found that nearly 1 in 5 admit they have lost track of a pension at some point, the main reasons being they have “never kept an interest”, “lost paperwork” or “forgotten to notify providers of address changes”. Of those who have moved home, 13% admit they have never notified their pension providers of their change of address and a further 12% confess they are unsure. When asked how they would go about finding a lost pension, most (32%) would contact their previous employer but a fifth (20%) said they would have no idea how to find it.
One solution, says Tilney, would be to consolidate scattered pensions into a single plan. This allows for simpler administration and oversight and the pension could then be taken from job to job, providing the employer agrees to pay into the scheme instead of their own. Yet most individuals (72%) have never consolidated plans and the key reasons people are they’ve never thought about it (23%) and don’t know how (20%).
Down the back of a sofa
Furthermore, 47% of men and 62% of women with pension plans admit they do not know where their pension is invested and 38% don’t even know which company are managing their current plan.
Andy James, Head of Retirement planning at Tilney, commented: “The research shows the worrying level to which the private pensions of millions of Britons are in complete disarray. Alongside property, pensions represent one of the largest forms of private wealth in the UK and for most people these are going to be critical in funding their lifestyles in later life. Despite this, many UK adults are not sufficiently in control of these important financial assets, which are often scattered across multiple plans, forgotten about entirely or the paperwork has disappeared down the back of a sofa.”