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£3bn unclaimed in lost pension

Billions of pounds' worth of our money is thought to be languishing in unclaimed pensions. Here's how to get your hands on your share of this cash.

Rainbow and a pot of gold

The idea of misplacing your hard-earned cash may sound unlikely, yet vast sums of money lie forgotten in pension schemes. 

In fact, it is thought that more than £3 billion is currently lying unclaimed in lost pensions – affecting an estimated 5 million people.

"We continue to be amazed by how many people have come to us asking for help not only in tracing the pension, but then explaining to them what they have actually accumulated."

This is the view of Craig Palfrey from adviser Penguin Wealth. 

How can you track down pensions you've lost?

If you think you have lost money, there is an easy way to track it down.

Contact the free Pension Tracing Service (0845 600 2537) run by the Department of Work and Pensions (DWP). 

This can help you to find both workplace and personal pensions using a database containing information on more than 200,000 pension schemes.

If the service finds your pension, it will then give you contact details of the administrator so you can get in touch with them directly.

New figures from the DWP show that almost 145,000 people have used the service in the last 12 months alone to locate long-lost funds – with 127,000 successful traces.

Tom Binstead from Bank House Corporate says the DWP service is "very good".

He adds: "The DWP service will generally find most pensions as long as you remember the name of your employer and the rough dates you were employed." 

'I found £39,000 in lost pension savings'

Lance Morton, a truck driver from Leicester, used the Pension Tracing Service to track down almost £39,000 of lost funds in three separate Scottish Widows plans.  

"I remember setting up one pension, but then lost track of it after losing my job and moving house," he says. 

Pound coins and notes"In addition, I'd completely forgotten two further plans that I'd set up."

Lance started his search after reading about the Pension Tracing Service online and decided to give it a try. 

"My first attempt at finding my lost funds was unsuccessful, so I racked my brain to try and remember more details," he says. 

"A few days later, DWP got in touch to say they had traced three pensions to Scottish Widows. 

"It turned out there was a combined total of almost £39,000. I really hadn't expected that."

How do people lose track of pensions?

In the past, people used to hold down just one or two jobs for most of their working lives, but this is no longer the case. 

The average person now has 11 employers in the course of their working lives according to the Pension Tracing Service, which predicts there could be 50 million lost pensions by 2050.

"Greater employment mobility means many people will work for several different employers over their lifetime, often leaving a trail of small pension pots behind them," says Jason Hollands from adviser Bestinvest. 

Danny Cox from adviser Hargreaves Lansdown adds that this isn't helped by pension scheme companies changing name or merging with other firms. 

Other reasons for losing track of funds include people moving house without telling their employer, or changing their surname when they get married.

Pension to move jobs with you

The government announced last year that it is set to introduce a system whereby if you move job, your pension pot will move too.

The "pot follows member" arrangement will mean any pots of less than £10,000 will automatically move with you. 

This will be increasingly important given the new flexibilities in regard to pensions announced in the March 2014 Budget.

Other tips to help you keep track of your pensions:

  • File all pension paperwork away carefully, including annual statements.
  • If you've not heard from your pension provider for more than a year, call to check they've got the correct details on file.
  • Notify all your pension providers – and employers – when you move house.

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Esther Shaw

Esther Shaw

Esther Shaw is a regular contributor to Confused.com and is the former deputy money editor at The Independent and Independent on Sunday. Before that, she worked as a money and City reporter on The Daily Express and Sunday Express.
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