The UK’s lost pension pots are a growing concern, with billions of pounds sitting unclaimed. Just two weeks ago, we discussed how over £25 billion in UK pensions remained unclaimed. Now, a new study by the Pension Policy Institute reveals the problem has worsened. The total amount of lost pension pots has surged by almost a fifth in just two years. The latest figures show that £31 billion is currently unclaimed across 3.3 million accounts, up from £26.6 billion in 2022.
Even with government initiatives aimed at reducing the number of lost pension pots, the trend continues to rise. Since 2018, the total number of lost pension accounts has more than doubled.
Why Are So Many Pension Pots Lost?
A separate study by The Centre for Economics and Business Research, conducted for PensionBee, found that one in five UK adults believe they have lost a pension pot. That equates to nearly 9 million people.
Auto-enrolment is a major contributing factor. The Pension Policy Institute notes that many people are automatically enrolled in pension schemes at different jobs. Since they don’t actively sign up, they often forget about these accounts when they change employers. It’s a situation similar to forgotten subscription services that keep charging long after a free trial ends.
How Can You Find a Lost Pension?
If you’ve worked in the UK and suspect you may have lost track of a pension, there are a few steps you can take:
- Use Pension Tracing Tools: Visit pensionattention.co.uk to check for any unclaimed pension pots. The government provides these tools to help people recover their pensions.
- Keep Contact Information Updated: Always update your contact details with past employers to ensure you receive any pension-related updates. Providing a secondary contact, like a family member, can also help.
- Save All Employment Documents: Even short-term jobs may have contributed to a pension fund. Keeping records from past employers can make it easier to trace lost pensions.
- Consider Pension Consolidation: Merging all your pensions into a single account makes it easier to track and manage your retirement savings.
Why Transferring Your UK Pension to India Makes Sense
For NRIs who have lived and worked in the UK, tracking down lost pension pots is only half the battle. Even if you recover your pension, leaving it in the UK might not be the best option. With rising taxes, fluctuating markets, and new inheritance tax rules, keeping your pension in the UK could mean losing a significant portion of your savings.
By transferring your pension to India through a QROPS, you can avoid unnecessary taxes and benefit from higher fixed returns, sometimes up to 10.5%. Unlike the UK, India does not impose a death tax on pension funds, ensuring that your family receives the full amount.
Instead of letting your pension sit unclaimed or watching it lose value due to high taxes and economic uncertainty, transferring it to India provides a secure, tax-efficient way to maximize your retirement savings.