1. Why do people lose pensions?
In 2013 AGE UK, the leading UK charity concerned with older people, conducted a survey to try to understand more about the UK public’s plans for retirement and general attitudes on the issue.
One of the most revealing things that the survey found was the fact that 23% of adults in the UK have lost track of at least one pension scheme. 47% of all missing pensions are simply classed as 'lost in the mists of time' in the survey and 20% say they have lost the paperwork relating to their pension. But what are the reasons why people are losing their pensions? Here are the top 3 reasons why people in the UK lose track of their pension pots:
If you have a personal pension, this can stay with you regardless of your employer and you should simply update the pension provider of any changes of address or personal details.
People move jobs more
One of the most interesting revelations of the Age UK report was the number of times people move jobs. The average person over the age of 65 has worked for an average of 5 or 6 employers over the course of their career, whilst nearly 25% of those in the 25-34 age bracket have already worked for this number of employers. This means that the younger generation will almost certainly have a variety of pension pots by the time they retire, which means some of them could very well be lost if some of the other reasons people lose their pensions are factored in.
It is a situation that is only going to worsen. Job security, which was once expected in most companies, is a rare luxury these days and the introduction of auto-enrolment will see far more people enrolled in pension schemes than previously. Under auto-enrolment, employees will automatically join their company pension scheme rather than opt-in as in previous years. It is expected that most people will choose to stay in the schemes, so this, combined with working for an increasing number of different employers will see people juggling a multitude of pension pots.
People move house more
Did you know that people these days move house more often than did their grandparents? According to a Royal Mail survey, those under 35 have already lived in an average of five homes, whilst their grandparents would have lived their entire lives in just three. As anyone who has moved house knows, it can be one of life's most stressful experiences and it is rare that any move goes without a hitch and without something going astray. This means that the more people move, the more chance they have of losing important documents, such as their pension details. They can also lose contact with their pension provider should they forget to update their address details with them.
It is a situation that is expected to get worse. With spiralling house prices and the average first time buyer's deposit being over £28,000, more and more people are renting. A shortage of local authority housing (with their long-term letting periods) means that most people are renting in the private sector, where many people are on rolling six month tenancies. This lack of assured tenancies means that some people may be moving home every six months.
Younger people may not always understand the value or importance of a pension
Unlike some other countries in Europe, children in the UK have very little, if any, education about personal finance and financial products whilst in the education system. That means that while many may have a general idea of what a pension is, they may not truly understand its importance and its value.
We now live in a world where students will be leaving university with debts averaging £44,000, according to the Institute of Fiscal Studies, and where The Money Charity calculates the average deposit for a first time buyer as £28,030. This means that there is not only a huge amount of pressure on young people financially but, even if they do have the foresight to invest in a pension, it is likely to be far from one of their main priorities.