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Are you part of the lost pension generation?
Workers are losing track of company pensions by failing to transfer their money when they change jobs.
by Michelle McGagh on Sep 05, 2012 at 00:01
Concerns about a 'lost generation' of pensions have been raised as new research reveals 16% of workers have lost track of their pension funds after changing jobs.
Research from Prudential shows one in six workers has lost pension details from a previous employer, and 76% of people have no idea of the value of the company pension pots they have built up over their careers.
Just under a quarter of employees, 24%, who were surveyed are confident they know the combined value of their pension pots.
The huge majority, 81%, of employees said they did not transfer previous company pensions to new employers, while 15% of employees expected their employers to transfer the pension for them.
'Job for life' no more
As the job-for-life concept declines, with younger workers changing jobs frequently, there is more need for employees to take responsibility for their pensions. Workers aged between 18 and 34 have had on average three full-time jobs, compared with those aged over 55 who have had five jobs in their whole career.
Stan Russell, retirement expert at Prudential, said it was vital younger workers do not lose out by losing track of their pension funds. ‘Keeping track of pension savings at every age is important, but it is even more crucial for younger workers, who are likely to switch jobs more often, to actively manage this process,’ he said.
‘It is also important to consider the benefits of transferring previous pension savings into a new employer’s scheme, although seeking advice before making such a big decision is a must.’
He added that the Pensions Tracing Service can also help find lost pensions.
Don't miss out on pension cash
Workers who do not keep track of their pension pots could miss out on a substantial amount of money in retirement. Those who do know the value of their combined pension funds say they have built up an overall fund worth £110,207 on average. However, there is a gender gap, with men saving an average of £154,094 over their working life and women saving £50,512.
‘Saving into a pension today is an important step in the right direction for workers to help ensure a comfortable retirement,’ Russell said.
‘It is essential for people to understand what type and level of savings they have built up in the past. They must make sure that their previous employers have their most up-to-date personal details and are sending them annual pension statements, so they can keep themselves properly informed.’
The government has announced plans to tackle the problem of stranded pension pots by introducing a ‘pot follows member’ system. This will see new pension pots that are created follow an employee as they change job, meaning fewer pots will remain dormant, allowing employees to build one more substantial pension. However, pensions that already exist will not be included in the plan.
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