Pension savers risk being 'thousands of pounds out of pocket' as over £9,000 on average goes unclaimed
Pension savers are being urged to plan ahead for retirement
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Pension savers are warned they could be missing out on an average of £9,000 as they are unaware of where their pensions are held.
Almost 40 percent of people admit they don’t know where their pensions are held, and this puts them at extra risk of losing track of them altogether, research shows.
Not knowing where one's pension is can negatively affect retirement income.
Research by Hargreaves Lansdown has shown only 62 per cent of people know where all their pensions are held, and over one in five (22 per cent) are not sure, while a further 16 per cent said they don’t know.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: "It’s easy to put off tidying up our pension admin, but doing so risks us losing out in retirement."
She continued: "You might not stay in a role for very long and so think it doesn’t really matter if you lose track of a pension.
Research found only 62 per cent of people know where all their pensions are held
PA"However, small pensions grow over time and so not keeping track of them could leave you thousands of pounds out of pocket when you come to leave work.
"The most recent data from the Pensions Policy Institute estimates there is around £26billion of lost pension money washing around the system, with the average lost pension being worth over £9,000 – so it’s well worth keeping track!"
It is common for people to lose track of all their pension pots as they could work multiple jobs throughout their lifetime, and auto-enrollment means many people will have a pension pot at each of these jobs.
The Government is looking at how to introduce a Lifetime Pension whereby people can choose the pension into which they want their employer to pay contributions.
This will go a long way towards helping people keep track of their pensions, although this will take time to implement.
There are, however, a few things now that people can do to make sure they aren’t losing track of all important pension money.
Morrissey said: "Take the time to make a list of where you’ve worked and check to see if you have pension paperwork for each one. If not, contact the Government’s Pension Tracing Service and they will help you find contact details.
"Once you’ve tracked your pensions down, it might be worth consolidating them into a SIPP. Having one overarching view of your pension can lead to better retirement decision-making and give you a clearer idea of what you have.
"However, make sure you aren’t missing out on any valuable benefits, such as guaranteed annuity rates, or incurring expensive exit penalties by doing so.
"With the most recent HL Savings and Resilience Barometer showing that only 39 per cent of households are on track for a moderate retirement income it is clear we must do all we can to make the most of our savings.
"Keeping tabs on where we are saving as we go through our working life is an all-important first step.”
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Moving all of one's pensions into one pot can slash the fees they pay and can mean they retire with a much larger sum saved.
However, Morrissey warned it's vital that people check that "they aren’t losing out on valuable benefits by doing so and seek advice if necessary."
People can use the Pension Tracing Service tool online, or they can call them on 0800 731 0193, or send a letter to them.
The service cannot tell people whether they have a pension or what its value is, but it may give them the contact information they need if they provide the name of their employer or pension provider.