Millions of pension pots lost due to simple mistake – £13,000 per pension could be claimed
Pensions can come in multiple forms. State pension is dependent on a person’s national insurance record and is relatively easy to track down. However, private pensions can be much more complicated.
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Workers are likely to have multiple pensions under their belt.
This has been made even more prevalent with the emergence of workplace pensions.
In recent years, employers have been forced to create pension pots for all eligible employees.
Both the employee and employer must put money into this pot to (hopefully) ensure better retirement outcomes for people.
With so many pensions to a person’s name, it can be easy to lose track of them, especially if all a person gets is a yearly update in the post.
People are regularly advised to keep on top of their pension pots and ensure they’re managed effectively and that advice could not be more important in light of recent findings.
The Association of British Insurers (ABI) recently claimed that £19.4billion worth of pension pots could be going unclaimed.
They estimated that around 1.6 million pensions were not being claimed, which calculates to about £13,000 per pot.
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These are mind-boggling numbers and Richard Pearson, a director for digital investing platform EQi, commented on the drastic findings: “It’s a difficult time for everyone, but the reported £19.4billion of pension posts left unclaimed shows why if you’re fortunate enough to be at home with time on your hands, now is definitely a good time to think about the oft-misplaced bit of our finances – pensions.
“Many of us now go through multiple jobs and even careers in our work lives, picking up small pot after small pot as we go.
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“Since each provider will have different sets of login information and even service levels between them, it’s no wonder many are losing track.
To make things easier for consumers, Richard provided a bit of advice for people to make their pension arrangements more manageable: “It’s a great time then, to pinpoint where you would have built a pot up and think about consolidating them into one manageable arrangement such as a self-invested personal pension or SIPP.
“The benefit of having a SIPP is being able to manage your pension funds in one place, and be clear of what fee you are paying on that money.”
“Beyond that, it is most likely people are only contributing the statutory minimum to their pension (typically 5 percent of earnings).
“It is well known that most of us don’t contribute enough to our pensions – having everything in one place will help keep a handle on what you’re saving and ensure this fits in line with your expectations for retirement.”
On top of professional and private guidance, pension holders can seek impartial advice from various independent organisations.
The Money Advice Service, Citizens Advice and Money and Pensions service all offer various guides on how to handle pension affairs.
The government also have a free to use pension tracking service on their website which could be a good starting point for concerned workers.
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