UK savers have more than £290bn held in dormant pension pots where no contributions or withdrawals are being made, which is over double the figure recorded when auto-enrolment was introduced.
The findings from pension administrator Equiniti (EQ) show that preserved defined contribution (DC) pension wealth stood at £291bn from 2016 to 2018, up from £139bn between 2012 and 2014.
This has added to fears that many workers are losing track of their savings, with the Association of British Insurers (ABI) having previously estimated that the UK has £20bn in 'lost pensions'.
“The sheer scale of preserved DC pension wealth is astonishing – it is around £65bn more than the value of DC pots that people are currently paying in to,” said Duncan Watson, CEO of EQ’s pension business.
“Of course, not all of this £291bn figure is forgotten pensions: it is common for people to save into a pension and then not touch it for years or even decades given they are long-term investments.”
The latest findings are based on data from the Office for National Statistics (ONS), and suggest that the advent of auto-enrolment has made it harder for people keep track of all their savings.
Introduced in 2012, the initiative forces employers to register their workers into pension schemes unless they decide to opt-out.
Although this has got more people saving, it also means that workers are more likely to enter retirement with numerous separate pots from separate employers built up over their working career.
EQ said that the introduction of pensions dashboards should help people keep track of their savings and minimise the financial damage that dormant pension assets can cause.
“In the meantime, the Pension Tracing Service – the government’s free tracing service – is a great way for people to begin finding out whether they may have lost assets and to kickstart their search,” Watson added.
Image credit: iStock
Author: Chris Seekings