Importance of keeping up-to-date with pension pots is highlighted as part of Pension Awareness week.
Nine out of ten UK workers have an unclaimed workplace pension.
New research from wealth manager Netwealth has found that 88 per cent of people with workplace pensions have at least one that remains unclaimed – amounting to an average of £28,000 per person.
This sizeable lost sum could otherwise be put to meaningful use when employees reach retirement amidst a backdrop of high inflation and living cost increases.
The research coincides with Pension Awareness week, which is aimed at highlighting the importance of saving for later life.
Charlotte Ransom, chief executive officer and founder of Netwealth, warned that savers with legacy pots lying dormant are also at risk of not having the full financial potential of these assets realised over time.
She said: “It is understandable that in the current climate of market volatility and the cost-of-living crisis, there is a growing fear among investors that their savings won’t go far enough in later life, especially with average lifetimes extending, requiring more substantial retirement savings. Now more than ever, it is vital that consumers track down any stranded pensions that they have worked hard to earn, and that they act to recover them sooner rather than later to regain control over these important pools of value.
“Savers need to be protecting and fully maximising the value of their retirement savings, ensuring their assets are working as hard as they could be when it comes to delivering financial returns.”
The data found that 42 per cent of the 1000 adults quizzed said that that between two to five of their various pots are now stranded.
This is particularly true for women, with 50 per cent of them saying they do not have sight of or access to up to five company pensions accrued throughout their careers.
Pension saving
These findings aim to help workers, who are expected to change jobs a number of times throughout their professional career. This means that many will amass multiple pensions over a lifetime, and the responsibility to keep track of these retirement pots falls to their owners.
At the same time, the importance of workers starting a pension plan in their 20s was highlighted by a study from Sussex-based Carpenter Box Financial Advisers (CBFA).
It found that starting a pension plan at 25-years-old with a £300 monthly contribution could potentially create a pension pot of more than £700,000, 40 years later.
In contrast, making the same level of contributions from 45-years-old would result in a potential fund of around £180,000.
Selling pensions to younger employees
Roy Thompson, partner and head of financial services at CBFA, said: “Retirement planning tends to be a low priority for younger people because there are lots of life choices competing for available cash, but if they can commit to regular pension contributions in their 20s, the effect of tax relief combined with compound gains can potentially be huge.
“How that money is used and the level of income it can provide will be dependent upon retirement planning choices made when you come to draw an income, but the message is very clear. The earlier you start, the benefit of regular savings, tax relief and compound investment returns over time is a huge lever to pull in creating good retirement outcomes.”
