£37 billion sitting in lost pension accounts
As we approach National Pension Tracing Day (Sunday 30th October), new research1 from Gretel reveals that 13% of consumers think they have a lost or dormant pension, rising to 23% of those aged 18-34 years, yet few have ever tried to track them down as the process is perceived as costly, complex and timely.
While Gretel, the free online hub which reunites consumers with lost and dormant accounts across the entire financial service industry, previously estimated that there were over 1.6 million lost or dormant pension accounts worth on average £23,125 per policy3, it expects imminent new research from the Pensions Policy Institute to put the number of lost pensions much higher, reflecting the impact of Auto-Enrolment.
Gretel’s own research found that of the 87% of consumers that have never tried to track down a lost or dormant account (ranging from pensions to investments and bank accounts):
• A fifth (19%) think the process seems too complicated/difficult
• Almost a third (31%) haven’t tried to find them because they didn’t know how to do it or where to start - up from 26% in 2020
• One in five (19%), rising to 25% of those aged 18-34, didn’t even known they could search for lost and dormant accounts
• One in four (25%) don’t think they have the necessary paperwork or passwords to allow them to find them15% assumed it was so long since they lost track of their account/money that it was no longer theirs anyway
• One in ten (10%) think the process to track down lost money is too costly, rising to 17% among those aged 18-34 years
Duncan Stevens, Chief Executive of Gretel said: “There is still much to be done in order to make the process of finding and claiming dormant assets simple and centralised for consumers. The figures speak for themselves; there is £37 billion languishing in lost or forgotten pensions today and yet, consumer awareness is low and those that have tried to get their money back, have faced multiple barriers. At the moment the process is too timely, costly and complex, and pension companies are not making it easy for their customers to find money that is rightfully theirs.”
Changing jobs is a common way that consumers can become disconnected from their company pension scheme, leaving them lost or classed as dormant. When a worker moves from one company to another, they do not generally take their pension with them. Gretel’s research has found that one in five (21%) of Brits have changed jobs 4-7 times in their adult life and a further 10% have changed jobs more than eight times.
Duncan Stevens added: “Unfortunately it’s all too easy to become disconnected from a pension scheme. Few of us have a job for life now; our research shows that many of us change jobs multiple times during our working lives and unless we actively consolidate our pension with each job move, our pension pots can quickly become lost or classed as dormant.”
The Dormant Assets Scheme, operated by the Reclaim Fund Ltd (RFL), allows financial services organisations with eligible assets to contribute dormant funds to support social impact. Even before the Scheme soon expands to include assets from pensions, insurance and investments, it has attracted £1.6 billion of dormant assets from banks and building societies alone and more than £892 million2 has been used by the Scheme for good causes. And while the Scheme ensures the original owners’ right to reclaim at any point in the future, Gretel argues that not enough is being done to reconnect these assets with their rightful owners prior to transfer.
Gretel’s dashboard, which went live in April 2022, has been launched at a crucial time for many people in the UK who face increasing costs and a squeeze on household spending. Uniquely, once a customer has signed up with Gretel, the service will keep working for them to constantly look for lost monies and flag any new accounts as and when they are identified. Gretel is the only service that covers the entire financial services industry.