The great pension treasure hunt

Thousands of savers can unearth missing fortunes in...

MILLIONS of pension pots are lying unclaimed and could provide a vital income boost to people in retirement. Here, The Mail on Sunday investigates how pensions go missing – and what you need to do to track them down.

NEARLY 1.6million pension pots are waiting to be claimed by people who have lost touch with their retirement savings over decades of employment – known as ‘gone-aways’. This figure comes from PensionsLink, which aims to reunite people with their missing pensions.

It does this by collecting the National Insurance numbers of gone-aways from pension providers. People who think one of their pensions may have gone astray can then ask PensionsLink to search its database to see if their plan is on it.

In the first three weeks of this month alone, 68,000 National Insurance numbers were added to the register, following on from 114,000 the month before.

This brings the total number of people recorded to have lost a pension on PensionsLink’s database to 1.58 million.

The service is free to use and paid for by pension companies – although not all providers are currently signed up. It is similar to the Government’s Pension Tracing Service which assists people in hunting down both workplace and personal pensions.

VALUE OF LOST INCOME

THERE is around £400million in unclaimed pension savings, according to the Department for Work and Pensions.

PensionsLink says its research indicates that the average unclaimed pension in the private sector would provide an annual income of £3,000 – up to £7,000 a year in the public sector. The majority of orphan pensions on the PensionsLink register are defined benefit based – also known as final salary – while a fifth are defined contribution, sometimes referred to as ‘money purchase’ schemes.

WHY PENSIONS GO ‘AWOL’

A RECENT survey concluded that there are a multitude of reasons why people lose track of pensions. They include moving house and not informing a provider of a forwarding address; lost paperwork; companies closing down after they left or merging with another; and forgetting about a pension contributed to early in working life.

One respondent said he should have looked after his own financial affairs because his wife had his pension paperwork and was withholding it since she became estranged. Another simply said ‘drink’ was the reason why they had lost track of their pension.

Michelle Cracknell is chief executive of The Pensions Advisory Service, which receives calls from people searching for lost retirement savings.

She says: ‘It is a requirement of most pension schemes to send you a benefit statement each year.

‘If you have moved and the statement does not reach you, the pension provider may try to find you.’

WHY IT IS IMPORTANT TO TRACK DOWN ALL PENSIONS

MANY people struggle to adjust to living on a lower income after giving up work. So ensuring all your pensions are paying you an income is vital.

Joanne Segars, chief executive of the Pensions and Lifetime Savings Association which represents workplace pensions, says: ‘Income in retirement is certainly one area where the adage “less is more” does not apply.’

People who had multiple jobs may have forgotten they were saving into a particular pension plan. This money could be the difference between a difficult retirement and a comfortable one.

Segars adds: ‘Few people work with the same employer all their working lives so it’s possible they may have more pension pots stashed away than they realise.’

PREVENTING THE PROBLEM IN FUTURE

NINE in ten people surveyed by PensionsLink believe pension providers are not doing enough to trace people with lost pensions.

Some support the idea of a ‘pensions dashboard’ for helping people keep a tab on their savings. This is a Government plan to allow individuals to view all their pension arrangements in one place.

Lisa Caplan, a financial adviser with online pension and investment company Nutmeg, is keen for such a plan to be implemented – 2019 is the target date.

She says: ‘It won’t just help people to keep track of their pensions. It will also provide performance details and fees levied – something the pensions industry is not good at.’

In the meantime, savers must remember to contact pension providers with any change of address.