Interactive Investor

A quarter of the over-40s have lost pension pots

25th November 2020 12:23

Laura Miller from interactive investor


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Workers can have up to 11 pension pots in their lifetimes, meaning many of us lose track.

Pension savers should search out old paperwork and retrace previous employers, after research found a quarter of those in their 40s have forgotten retirement pots.
Adviser My Pension Expert surveyed 530 UK adults aged over 40 in full-time work to investigate how they are managing their pension investments. 

It found 25% of over-40s have lost track of their pension investments – and the problem was even worse among those aged between 40 and 54, where a third had forgotten pots.

With the end of ‘jobs for life’ and the average career spanning 11 workplaces, it is easy to lose track.

The research found 40% of UK adults surveyed have multiple pension pots with different employers.

Consolidating several pensions into one pot is a solution. It can make it easier for savers to keep track of their retirement savings and lower the fees they pay.

Many small pots each charging fees, for as long as 40 years, can eat significantly into the final value of a retirement nest egg. 

High fees and charges are terrible for pension growth. Paying 1% less in charges a year over 20 years could mean nearly £50,000 extra in your pension at retirement, according to financial advice firm Open Money. This assumes 5% growth a year before fees on a £100,000 pot.

However Open Money also found almost a quarter (23%) of British adults do not know what type of pension their employer contributes to. Given this lack of awareness, OpenMoney recommends taking regulated advice before deciding to transfer to a new provider so valuable benefits are not lost.

Elsewhere the research found diverse pension investments are common, which can also make keeping track of various accounts tricky. Around 28% of workers have retirement funds invested in stocks and shares, 18% in property and 12% in classic cars or art. 

Over a fifth (22%) of respondents sought advice about diversifying pension investments within the past twelve months. 

Savings accounts (60%) and personal pensions (47%) remain the most popular method of saving for retirement. This was followed by defined contribution pension schemes (46%), ISAs (37%) and defined benefit pension scheme (32%).

Andrew Megson, executive chairman of My Pension Expert, said:

“Today, there is no such thing as one-size-fits all when it comes to pension planning. People are evidently investing in a wide range of assets, accounts and schemes to build up their retirement fund, but this presents challenges as well as opportunities.”

Women especially need to keep hold of vital pension paperwork that proves their entitlement. Research consistently finds the average private pension wealth of the average woman in their early 60s is one third of the average man’s.

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