Client
Portal

Looming pension pitfall

Back to News & Views

£50 billion of hard-earned pension funds could be in jeopardy

Recent investigations by the Centre for Economics and Business Research have illuminated a daunting predicament facing the United Kingdom’s pension sector[1]. An alarming £50 billion of hard-earned pension funds could be in jeopardy, lost within neglected accounts or dispersed amongst a myriad of forgotten pots.

In 2023, was surmised that upwards of 4.8 million pension pots had vanished from the radar of UK citizens, with approximately one in ten workers expressing concerns over a potentially misplaced pension pot valued at over £10,000.

The forecast suggests a stark escalation, with the aggregate number of UK pension pots set to surge by 130%, from the current figure of 106 million to 243 million by 2050. This burgeoning crisis is attributed to the increasing trend of job mobility among the youth and the ripple effects of auto-enrolment. This scheme has markedly bolstered workplace pension engagement since its inception in 2012.

Generational gaps and accumulation trends

A detailed analysis reveals a discernible disparity across different age groups in terms of pension accumulation. Individuals below 35 years of age have, on average, accumulated more pensions (2.4) compared to their mid-career (35 to 54 years: 2.1) and senior counterparts (over 55 years: 1.7), despite having shorter employment histories[2].

It is projected that the youngest cohort entering the workforce today will amass, on average, five pension pots by their retirement age of 68, with some individuals possibly gathering over twenty separate pensions throughout their career span. The likelihood of misplacing a pension pot is notably higher among the younger workforce – 25% believe they might have lost track of a pension, in contrast to 17% of those in mid-career and just 8% of older workers.

Government initiatives and individual vigilance

To address the escalating issue of unclaimed pensions, the government has put forth initiatives such as pension dashboards and the innovative ‘pot for life’ concept, aiming to alleviate the challenges of tracking multiple pension pots. The inadvertent neglect of pensions can lead to a less secure financial standing in retirement. Maintaining meticulous records of previous employment, alongside pension provider details, requires professional financial advice.

Furthermore, frequent job changes, particularly prevalent among the younger generation, accentuate the risk of accruing and subsequently losing track of multiple pension pots. This scenario underscores the necessity for governmental support and guidance in managing pensions effectively, ensuring a robust private pension framework to support the financial sustainability of an ageing population.

Securing your financial future

As we navigate these changing times, the importance of being proactive in managing our pensions cannot be overstated. Consolidating pensions could be a prudent strategy for those seeking to safeguard their retirement savings and ensure a stable financial future. It’s imperative to remain informed and actively manage your pension portfolio.

Source data:
[1] Analysis conducted by the Centre for Economics and Business Research, on behalf of PensionBee – a ‘lost’ pension pot is defined as one in which the connection between the owner and the pot is currently cut off. This doesn’t mean these pension pots are lost forever, and they’re likely recoverable – 19 March 2024.
[2] An average number of pension pots was created using respondents’ estimates of how many pots they have. Where they were unable to provide one, we asked them how many employers they had in various time periods and multiplied that by the average pension enrolment proportion for the period. The weighted average number of pension pots of the general sample is multiplied by the number of UK adults as per ONS census data from 2021 to find the UK-wide total.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

 

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Book your FREE, no obligation discussion today. Schedule Appointment

Sign Up to our mailing list - Receive regular news, tips and financial commentary from the Gemini Team.

Latest News

  • The experiences of today’s retirees offer a wealth of knowledge for anyone planning their retirement. By observing the paths already taken, future retirees can glean valuable lessons from the triumphs and challenges faced by those who have navigated this transition before them. This collective knowledge is crucial in shaping a retirement plan that balances financial security with mental well-being. [...]

  • When considering retirement planning, pension savings are a crucial component of your financial strategy and essential for a comfortable retirement. Securing the right professional advice is critical, as decisions made at this stage will significantly impact you and your family. [...]

  • How you invest in your 50s could significantly impact your quality of life in retirement. While there is still time to increase your retirement savings, a seemingly simple mistake could derail your plans. This is where obtaining professional financial advice becomes crucial. [...]

  • Following the 8.5% rise in the annual State Pension from 6 April, the redirection of this enhanced income into private pension savings could make sense under certain conditions. The idea of investing one’s State Pension into a personal or Self-Invested Personal Pension (SIPP) might seem at odds with conventional wisdom. [...]

  • A comprehensive survey has unveiled a complex picture of how savers perceive their pension investments. Despite a high level of awareness, with 82% of pension savers acknowledging that their pensions are invested, a mere 26% possess knowledge about the specifics of these investments[1]. This gap in understanding presents a unique insight into the current attitudes towards pension investment among savers. [...]

  • Some people may believe estate planning is just for the wealthy. However, effective estate planning is essential to managing your assets and final wishes while trying to ensure your family’s financial stability once you have passed on. Estate planning isn’t just for the elderly, either. You don’t have to be old to become mentally incapacitated or pass away early from an illness or even an accident. An estate plan will ensure that your affairs are properly executed in the event of your passing. [...]

  • Recent investigations by the Centre for Economics and Business Research have illuminated a daunting predicament facing the United Kingdom’s pension sector[1]. An alarming £50 billion of hard-earned pension funds could be in jeopardy, lost within neglected accounts or dispersed amongst a myriad of forgotten pots. In 2023, was surmised that upwards of 4.8 million pension pots had vanished from the radar of UK citizens, with approximately one in ten workers expressing concerns over a potentially misplaced pension pot valued at over £10,000. [...]

  • 2 weeks ago

    In the world of investing, where numbers and market analyses typically dominate, a crucial element often remains veiled in the backdrop – our behaviour. Behavioural investing emerges as a pivotal field, merging the realms of finance and psychology to scrutinise how our emotions, cognitive biases, backgrounds and worldviews intricately influence our investment decisions. It ventures into the less discussed but significant spectrum of how our psychological makeup can mould our financial futures, for better or for worse. [...]

  • Recent developments have seen the government introduce a Lifetime Provider model for workplace pensions, a move that has sparked considerable interest and debate. Findings from a recent survey reveal a striking preference among employees for their employers to take the lead in selecting their workplace pension provider. [...]

  • A recent study has spotlighted women and investing, offering critical insights that aim to empower women to take the reins of their financial destinies and forge paths toward a prosperous future. Notably, an impressive majority of women (68%) engage in investment activities at least once a month, with over two-fifths (42%) diligently monitoring their savings and investments via online platforms or apps at least once weekly[1]. This proactive stance leads to nearly one in five (19%) women having a precise understanding of the value of their investments at any given time. However, the distribution of investment vehicles among women reveals a tendency towards traditional savings accounts (61%) and Cash ISAs (35%), with a notably smaller segment (17%) opting for Stocks & Shares ISAs, in stark contrast to 30% of men. [...]

  • In finance, the core investing principles stand as timeless beacons, guiding investors through periods of market volatility towards financial prosperity. These principles, distilled from the wisdom of centuries and the hard-won experience of investment titans, serve not merely as strategies but as foundational truths that underpin the very art and science of investing. As we peel back the layers, we explore the core principles of investing, the bedrock upon which the edifice of enduring wealth is built, and discover how these timeless truths can empower your financial journey. [...]

  • Beginning on 6 April 2024, a pivotal shift in pension benefit taxation commenced. The Lifetime Allowance (LTA) was replaced by a new structure comprising three distinct allowances: the Lump Sum Allowance (LSA), Lump Sum and Death Benefit Allowance (LSDBA), and Overseas Transfer Allowance (OTA). The implications of these changes will largely depend on individual circumstances, such as the aggregate value of one’s pension savings, any prior withdrawals from pension schemes and existing lifetime allowance protections. [...]

Gemini Wealth Management Ltd is Authorised and regulated by The Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to those based in the UK.

Website by Mellow Marsh Software
© Gemini Wealth Management Ltd
Important Documents | Cookie Policy