Millions of people in the UK don’t know who is looking after their pension, putting them at risk of their savings being eroded, experts have said.
Around 3.3 million savers don’t have their pension details, with lost pension pots worth an average of £9,500 each, according to pension campaigners Pension Attention.
The figure comes as a government-backed initiative is underway to reunite people with their long-lost savings before they retire.
Here’s what you need to know about missing pension pots — and how to find yours.
What is a pension pot?
A pension pot is the total amount of money saved for retirement from contributions and employer and employer have made, including any investment growth.
Unlike the state pension, which is paid by the UK government and funded by national insurance contributions, private providers are a voluntary agreement where both employers and employees invest with a private pension provider.
Private pensions include personal pensions, stakeholder pensions, and workplace pensions, which may be arranged by both an employee and employer.
While the state pension is set at a fixed weekly maximum, which can be accessed from your 66th birthday, private pension funds can be withdrawn from the age of 55.
How do I track down my pension pots?
If someone has lost track of their old pension provider, they can be tracked down through a free government pensions tracker tool, where people can search for the contact details of their former employer’s pension provider.
There is no limit on the amount of private providers you can hold a pension with (PA)
A timed experiment carried out by Pension Attention, which involved 400 people, found it took seven minutes and 29 seconds on average to use their free tracking tool to find an old pension.
Mark Smith, spokesman for the Pension Attention campaign, said: “With just a few minutes, you can give your savings a real boost by visiting pensionattention.co.uk and use the pension tracing tool to reconnect with forgotten pots and follow our tips to better understand your pension.”
Smith also advised people to comb through their employment history to “fill in any gaps” in their pension history.
“Don’t forget to update your provider with your current details so you stay connected to your savings for the future,” he added.
How do I access my pension pot?
To access a private pension, first contact your pension provider to confirm when you can take money out, which is normally from the age of 55.
The pension provider will require details like the address on the account and a National Insurance number.
There are different ways a pension pot can be paid out. Some take a 25% tax-free lump sum and use the rest as “an income for life” — a guaranteed monthly income throughout their retirement, or take it out in its entirety.
Should I consolidate my pension pot?
If someone has two or more private workplace pensions, they can consolidate them into one single pot.
This can be done for ease, as well as to get better pension rates and boost retirement savings.
While the ease of having multiple pension funds in one place can be appealing, it’s always worth checking with a pension provider before consolidating to ensure the best rates.