5th January 2017

Do you have any forgotten or lost pension policies?

It’s not always easy to keep track of a pension, especially if you’ve been in more than one scheme or have changed employer throughout your career. The extent to which pension policies are being forgotten has been revealed in research from Aviva. A survey of almost ten thousand people who hold a pension has revealed that just under one in eight (13%) admitted they have at least one pension that they had forgotten about[1]. This is equal to more than 2.5 million pension policies currently sitting in the back of people’s minds[2].

Have you received a refund?
If you left an employer before April 1975, it’s likely you will have received a refund of your pension contributions. If you didn’t pay into the scheme, you probably won’t be entitled to anything, unless you were in the scheme for at least 15 to 20 years.

If you left the employer between April 1975 and April 1988, you will have a pension, provided you were over age 26 and had completed five years in the scheme. If not, you will almost certainly have had a refund of your pension contributions and have no further rights.

If you left the employer after 1988, you will be entitled to a pension, as long as you completed two years’ service. If you left the pension scheme with fewer than two years’ service, you probably received a refund of your contributions at the time you left.

Misplaced or forgotten?
Among those with a forgotten pension, the majority believe they have misplaced one pot (77%), although 17% think they have forgotten about two and 6% have forgotten three or more.

According to government figures, there is an estimated £400 million in unclaimed pension savings[3]. At the same time, almost three in five (59%) UK adults are worried about not having enough money to last them in retirement[4].

Annual statement
Most pension schemes of which you’ve been a member must send you a statement each year. These statements include an estimate of the retirement income that the pension pot may generate when you reach retirement.

If you’re no longer receiving these statements – perhaps because of changes of address – then to track down the pension there are three bodies to contact: the pension provider, your former employer if it was a workplace pension, or the Pension Tracing Service (an online service available to help you find contact information).

Boost to retirement
Although tracking down a lost pension can provide a valuable boost to retirement income, those who delay could receive a smaller amount than expected. Forgotten pensions may have been subject to charges and not invested in the best way suited to the policyholder, making it worth less than it would have been if it was actively managed.

The research revealed the lack of engagement around pensions. More than a quarter of savers (28%) admitted to never reviewing their retirement savings, while almost a fifth (19%) of those with a pension said they review it less than once every five years[5].

Fund choices
Since the introduction of auto-enrolment, the number of pension savers who are unaware of their fund choices or have never reviewed them has risen to almost 1.5 million people or 15% of private sector employees, up from 9% at the start of 2013[6].

It’s also important to be aware of the potential consequences of having a number of different pension pots with small amounts of money in each. It’s likely that there will still be charges taken out of those pots for their management and administration, and that can have implications if you are no longer contributing into them.

Source data:
[1] YouGov survey of 9,910 people in the UK (January–December 2015) who hold a pension carried out on behalf of Friends Life, now part of the Aviva group[2] ABI Key Facts 2015 says there are 20.8m individual pension policies in force. 13% of 20.8m = 2.7m[3] DWP: https://www.gov.uk/government/news/new-pension-tracing-service-website-launched[4] Research conducted for Aviva by Censuswide, with 2002 General Consumers aged 18+ in GB between 30 September and 5 October 2016. The survey was conducted from a random sample of UK adults.[5] YouGov survey of 9,498 people in the UK carried out on behalf of Friends Life, now part of the Aviva Group[6] Aviva’s latest Working Lives Report and analysis of data from the Office for National Statistics (ONS).