Many people in the UK are at risk of missing out on significant amounts of income in retirement because they’ve lost touch with their pension savings.

Research published by the Pensions Policy Institute suggests there are nearly 3 million lost pensions in the UK, containing a total of almost £27 billion – around £9,500 per pot¹.

Why are there so many lost pensions?

Lost pensions are usually the result of people changing jobs. Since pensions are often set up by employers on behalf of their employees, when a worker moves to a new company, they may end up leaving their pension behind – even though they’re still entitled to the money saved in it.

The problem may be exacerbated further down the line if the pension holder changes address and the provider can no longer contact them, or if the pension provider changes.

As well as boosting your overall retirement savings, tracking down any lost pensions gives you the opportunity to consolidate all your investments into a single pot that can be managed more easily and at potentially lower cost (as we explain below).

How do I find a lost pension?

If you think you’ve paid into a pension in the past but no longer receive annual statements for it – perhaps because you’ve moved home – look through old paperwork to see if you can find details of the scheme and/or the provider.

If you have these details, or if you simply know which company ran the pension, you can get in touch with them, providing information such as your name, date of birth and National Insurance number.

The government-backed MoneyHelper service has a template letter you can use (scroll down to the section headed ‘Contact the pension provider’).

If you had a workplace pension but you’re not sure which pension company provided it, speak to the employer that set up the scheme.

A third option is to get in touch with the government’s Pension Tracing Service to help you track down your lost pot.

Vanguard also offers a pension finding service that can track down old and lost pensions for free.

In general, lost pensions tend to be defined contribution (DC) schemes, where the amount paid into the pension by the employer and the individual is a specific percentage of salary, but the income that the pension will eventually generate depends on stock-market performance and is not guaranteed.

Defined benefit (DB) or final-salary schemes, on the other hand, are administered by the employer rather than a pension company, and offer guarantees related to the income they’ll eventually provide.

They can also come with other valuable guarantees, such as death benefits or the amount of tax-free cash they offer, for example. As such, transferring out of a DB pension may not be in your best interests, so you may wish to speak to a financial adviser before you decide.

Next steps: bringing together your pensions

Tracing lost pensions gives you a better picture of how much money you have saved for retirement, as well as whether you’re on track to generate the income you’re likely to need in your later years.

It could also make sense to bring your pension savings together into a single pot, such as a self-invested personal pension (SIPP). Here’s why:

• Visibility: Having your pension savings all in one place makes it easier for you to see how your investments are performing on a regular basis. Vanguard’s Personal Pension (SIPP), for example, gives investors online access to their funds, so you can check performance whenever you like – there’s no need to wait for an annual statement from your pension provider.
• Investment strategy: A single pot also means you can make sure your funds are invested in line with your goals and risk appetite. For example, you may want to reduce the level of risk in your investments as you approach retirement, and this is much more straightforward if your money is all in one place.
• Lower costs: Older pensions may carry significant annual fees that are often hidden in the scheme’s small print. The Vanguard Personal Pension has an annual flat fee of just 0.15%, capped at £375 for amounts over £250,000, in addition to individual fund charges. We don’t charge a fee when you want to start drawing on your pension savings, either.

Once you’ve found an old pension, you can ask the provider to transfer it to a SIPP. Vanguard doesn’t charge a fee for transfers, but your existing provider might, so check before you transfer. We don’t have a minimum transfer value either, so we’ll accept pension pots whatever their size.

Remember, though, to check if the pension you are transferring has valuable guarantees as it may not be in your interests to switch.

¹ Pensions Policy Institute briefing note 134 published 27/10/2022.