- ONS stats show rapid growth in value of preserved DC pension wealth since auto-enrolment
- Since 2012-14, preserved DC wealth rises from £139 billion to £291 billion raising concerns about ‘lost’ savings
- EQ urges pension savers to check whether they may have unknown savings with a previous provider or employer
Analysis from EQ (Equiniti Group plc), one of the largest providers of outsourced pension administration in the UK, demonstrates the need for pension savers to ensure they are not losing any hard-earned cash through dormant pots.
ONS statistics1 show that in 2016-18 there was £291 billion of capital preserved in DC pensions – meaning a pot where no withdrawals or contributions are being made. It is an indicator that many people could be in danger of losing track of their pension pots when moving between jobs or by not updating their contact details when they move to a new house.
The figure has more than doubled since the advent of auto-enrolment – rising from £139 billion in 2012-14 to its current value of £291 billion – which forces employers to register their workers into schemes unless they decide to opt-out. While this encourages better behavioural trends in terms of later-life savings, it can also mean workers enter retirement with numerous separate pots with separate employers built up over their working career which are difficult to track.
The most recent industry estimates from the ABI suggest there could be around £20 billion of lost pensions, at least six times higher than previously estimated2.
Duncan Watson, CEO of EQ’s pension business, believes the stats should encourage all people to check whether they are sitting on savings that they are unaware of and says that the Pensions Dashboard will go a long way to helping people keep track of their pensions.
“The sheer scale of preserved DC pension wealth is astonishing – it is around £65 billion more than the value of DC pots that people are currently paying in to.
“Of course, not all of this £291 billion 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. Many of those with more than one pot will also be well aware of where their money is kept and how to access it when the time comes.
“However, it is also the case that lots of people – especially as they get older and potentially accumulate more than two or three pension pots – can lose track of their pension savings. It can be difficult knowing who to talk to so that these savings can be relocated especially if the amount of money is unlikely to make a tangible difference to their quality of life.
“But everybody should check to see if they have more hard-earned savings. Even a small pot could provide helpful extra income in retirement or as a lump sum allow a one-off payment for an expense such as a holiday. The Pensions Dashboard should further 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.”
For more information about EQ:
Temple Bar Advisory
Alex Child-Villiers / William Barker / Sam Livingstone / Alasdair Todd
Tel: +44 (0)20 7183 1190
About the research
Notes to Editor:
About EQ (Equiniti Group plc)
EQ is an international technology-led services and payments specialist. With over 5,000 employees, it supports 36 million people in 120 countries and serves c.70% of the FTSE 100. EQ’s purpose is to care for every customer and simplify every transaction, delivered with less of an impact on the environment.
EQ is listed on the London Stock Exchange as Equiniti Group plc.
Find out more https://equiniti.com/
EQ serves clients and customers through four divisions:
EQ Boardroom: Share registration, governance and investor relations advisory, and employee benefits services
EQ Digital: Helping regulated businesses and Government to manage customers through innovative digital solutions
EQ Paymaster: Pensions, annuities, flexible benefits and payroll for the UK’s largest public and private sector organisations
EQ U.S.: Transfer agency, equity compensation services and digital solutions for U.S. firms; serving the world's leading brands since 1929