Savers hunt for £40bn in lost pensions ahead of state raid
Government’s plan to seize ‘dormant assets’ prompts search for lost pots. By Harry Brennan
More people are hunting down lost pension pots to forestall government plans to seize retirement savings that lie dormant for years. The Government approved radical proposals at the start of the year to use forgotten pensions and other dormant assets to unleash an initial £800m of funding for charities and social enterprises in a bid to help local economies bounce back after the pandemic. It already uses dormant bank accounts in this way and lost pensions represent a potential £40bn gold mine in additional state funding.
But some are turning detective to recover long forgotten savings before the state intervenes. The abundance of free time over the past 12 months has given them a unique opportunity to get their finances in order.
Jill Robb, 42, from Belfast, who runs her own marketing businesses, said she “felt like Sherlock Holmes” after she recovered an old retirement pot she had lost track of for more than a decade. The forgotten company pension had more than doubled in value over the years to £14,000.
“It was worth around £6,000 when I left the company in 2008,” she said. “I was working in London and living in Surrey at the time, but have moved four times since then. During multiple moves, including back to Northern Ireland, the paperwork just got lost.”
Divorcing her former husband in 2010 and reverting to her maiden name also complicated the process. Now with a new family and the financial pressures of the pandemic, it was not until this year when she spoke to a financial adviser that Ms Robb thought about recovering the old pot, she said. She searched for her old pension on the Government’s tracing service but it did not throw up any results. Ms Robb then set out on a long paper trail, using Facebook, LinkedIn and Friends Reunited to speak to old colleagues and find out what had happened to her old firm and its pension scheme following a number of mergers and takeovers.
“I managed to track down the firm using Companies House records but then had to prove to the plan provider that I was who I said I was before I could access the money,” she added.
Duncan Stevens of Gretel, an asset tracing firm, said there had been an increase in the number of people inquiring about lost savings during lockdown.
“People have more time on their hands and financial concerns are at front of mind,” he said. The firm estimates that 20million people have a share of around £50bn in lost savings of some kind today. Almost £40bn of this sum is in lost pensions, the firm said, and millions more pots are expected to become dormant over the years as people move from job to job and are automatically enrolled in multiple schemes.
Its figures are based on data from the Pensions Policy Institute, an independent researcher, which suggested that there were as many as 1.6million dormant pensions worth around £20bn in 2018. The figure is expected to be much higher today because of investment growth and more pots becoming lost. Savers risk missing out on large sums in retirement as a result.
A new “pensions dashboard” that will allow employees to track multiple workplace pensions all in one place to mitigate the problem is under development and is expected to be introduced in 2023 after years of delay. There will be 50million dormant pots in the system by 2050 without interventions of this kind, according to official estimates.
In January the Government confirmed that pensions that had lain forgotten for years would be used to fund good causes in a massive expansion of the “dormant assets” scheme. Seized savings will be put into a recovery fund and slowly paid out in endowments. This means that savers will always be able to claim their money at a later date and are guaranteed to get everything back.
You can trace lost pensions by getting in touch with previous plan providers or employers. You may need to search through public records to find the new provider if the pension scheme has changed or the firm has been taken over. You can use the free Pension Tracing Service on gov.uk or call 0800 731 0193. For more complex cases you can get help from a professional asset tracing service.
Some firms charge consumers directly, such as Legal & General, which charges £100 for a lost pension search. Others, such as Gretel, have no-fee models and instead make money by charging financial services providers.
‘I felt like Sherlock Holmes after I recovered my old £14,000 retirement pot’