Older people with lost pensions could have even more valuable ones to discover
UK workers could be missing out on pension pots worth more than £6,000 on average, with millions of them lost, often after people move jobs.
The Pensions Policy Institute (PPI) says more than three million pots remain lost, with the vast majority – around 2.5m – belonging to those aged under 55.
A total value of these lost pension pots is around £18.7bn, even at the lower end of the estimate, highlighting the scale of the challenge to reunite workers with their retirement savings.
One of the hoped-for solutions is the incoming pensions dashboard, currently due to be in place during the 2027-28 tax year. But it has been beset by issues and there is still no user access, many years on from the first proposals to create one.
The dashboard is intended to showcase all of a person’s pensions, including state, workplace and personal ones, in one place – making it easier to track down, move and manage retirement savings.
Pension providers are due to all have been connected by the end of the current month. But another deadline for daily reporting was pushed back earlier this year, to March 2027.
The overall average size of a lost pension pot sits at £6,220. But that increases to £10,710 as the average pension pot missing for those aged 55-74, many of whom might be either soon approaching retirement age or already retired.
Further evidence of the pension gender gap can also be seen in the fact the average size of a lost pension for women is £5,370, compared to £6,830 for men.
Invest at least £100 in Stocks or ETFs of your choice. Get fractional shares worth £50!
Invest at least £100 in Stocks or ETFs of your choice. Get fractional shares worth £50!
“The latest Pensions Policy Institute (PPI) research shows this remains a major issue, with more than three million pension pots now considered lost,” said AJ Bell public policy director, Tom Selby.
“While the average pot value may not sound life-changing on its own, £6,000 can make a significant difference to someone’s retirement income. That figure rises to £10,000 among those aged over 55 – people who will likely be thinking about retirement in the not-too-distant future – and that is just an average, meaning many will hold much larger forgotten sums.”
Emma Furlonger, MD for workplace pensions at Standard Life, added: “It’s deeply concerning that so much money put aside for retirement can become disconnected from the people it belongs to. With around 2.5m lost pots belonging to people under 55, this is clearly a challenge that extends well beyond those approaching retirement, and the answer can’t simply be to expect everyone to become an expert at tracking down pensions accumulated over decades of working life”.
Ms Furlonger added, however, that dashboards have the potential to “transform how people engage with their retirement savings” and help to reconnect individuals with their lost pensions.
Workers can search for pensions they think might be lost using the government’s Pension Tracing Service. Other services, such as Gretel, can do similar, and workers (or former workers) should not need to pay to track them down.
Pensions can become lost when you move jobs, do not update old addresses, when pension providers merge or are bought up or if your personal details change across the years.
Dr Suzy Morrissey, deputy director of the PPI, said the “new figures show lost pension pots remain a significant issue for savers, providers, and policymakers” alike, while Oliver Morley, CEO of the Money and Pensions Service (MaPS) said the incoming dashboard, which MaPS is responsible for, is a key part of the plan for ensuring retirees know what standard of living they face and can plan accordingly.
“With around 2.5m lost pensions belonging to people aged under 55, there is a need to ensure no-one is missing savings for the retirement they want,” he said.
“The MoneyHelper Pensions Dashboard being developed by MaPS, expected to launch in financial year 2027/28, will help tackle this problem. As well as a single overview of pensions in one place, a dashboard will show pensions that people may have lost touch with.
“While this is only part of the important work to ensure people have the retirement savings they need, it is a vital part of making planning for later life easier.”
Join thought-provoking conversations, follow other Independent readers and see their replies