A shift in the UK working culture and confusion around retirement planning is creating a pension ‘black hole’, with almost a quarter (23%) of UK adults stating they have lost track of at least one of their own pension schemes, according to a new poll for Age UK.
The online poll, commissioned to find out more about people’s attitudes and plans for retirement, reveals that nearly a third (30%) of UK adults would try to trace a lost pension – if they realised they had lost track of it and knew where to start hunting for it!
When asked to provide a reason for the lost pensions ’black hole’:
- Nearly half (47%) were unclear how they lost track of their lost pension
- 1 in 5 (20%) people said they had lost their missing pension paperwork
- 10% said that they had moved jobs too many times to keep track of their pensions
- Younger people are more likely to lose track of a pension, with 37% of the respondents aged 18-44 already having experienced this.
Clearly the growing trend for adults to have a variety of employers over a lifetime, often resulting in multiple workplace pensions, is one of the root causes of the emerging pension ‘black hole’. The average person now aged over 65 has worked for around 6 (5.6) employers in total, while a quarter (23%) of those aged 25-34 have already worked for a similar number, with probably a further 35 years of employment before they are likely to retire. This indicates that the younger generation could have an even greater variety of pension pots as they get older.
The Age UK report concluded that the current difficult financial situation has created a mixture of scepticism and uncertainty about long-term financial planning:
- 12% of those surveyed said they don’t think that there is any point as ‘nothing is guaranteed’
- 9% didn’t know how to start out planning for retirement
- Worryingly, 24% of adults said that they were aware that they should be financially planning for their retirement, but currently can’t afford to.
Asked about tracing a lost pension, respondents in the poll evidenced some uncertainty about how to trace a pension:
- If they realised that they’d lost a pension, nearly a quarter (23%) of potential pension-hunters would ask previous employers for help
- 15% would consult the government or tax office
- 11% would look online for advice
- 7% would turn to a friend or relative for help.
Commenting on the findings, Lucy Harmer, Head of Services at Age UK, said: ’It’s really important we all set aside time to keep on top of our personal admin, such as organising paperwork and keeping details of any financial products safe and secure. This is especially crucial for pensions as it may be some years down the line until they need to be accessed. With the number of jobs we have over a lifetime increasing, it’s likely that people will accumulate several small pension pots. In many cases these bring a less fruitful income in later life than one large pension pot’.
‘While some measures are being taken by the Government to account for smaller pension pots likely to be created under automatic enrolment, existing pots that we may already have are not being accounted for. This makes it more important than ever that we keep on top of what we have already accumulated. We strongly advise people to seriously think about planning for retirement and the kind of lifestyle you want – it’s never too early’.
If you would like to discuss pension tracing and advice on how to proceed with any older pensions you may have, please contact a member of the team.