Private pension owners in the UK are missing out on their pension pots as they fail to notify insurers of when they move home
Research commissioned by the Association of British Insurers (ABI) has found people rarely contact their pension provider when they move to a new house. As a result it has been estimated that there are around 1.6 million pension pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pension pot.
The association said insurers are trying to reunite people with their lost pensions, life insurance and investments. This is usually done by sending a letter to their new address.
The research, and the size of the unclaimed pot has been used to produce guidance for insurance and pension providers that aims to help identify, track down, verify and reconnect people with lost savings through improving reconnection communications.
Typically, people move home eight times in their life. As part of the study, people were asked about their ‘to-do’ lists when they move – things they would do automatically and things they would do when prompted.
It found the majority (89%) automatically think about telling their GP or dentist about their change of address. However, only 1 in 25 instinctively think about telling their pensions provider about their new address.
Telling their bank or utility providers is the highest priority on their list, with, just half of people think to contact their pension provider is a high priority, and that was only when prompted.
“Different generations use varying methods to remind themselves of what needs doing when they move,” said the ABI. “Even with help to remember, the ‘boring’ tasks are pushed further and further down the list, sometimes not even being included at all. This includes updating your address with your life insurance and pension provider.”
The Government predicts that there could be as many as 50 million dormant and lost pensions by 2050. In 2017 more than 375,000 attempts were made to contact customers, leading to £1 billion in assets being reunited with them.
Dr Yvonne Braun, Director of Policy, Long-Term Savings and Protection at the ABI said: “During the lockdown many of us have been focussing on those jobs that never get done, so now is the perfect opportunity to check all your financial information is up to date with the correct address. It is simple to do. All you need is to check the address on your last annual statement or log in to your provider’s website.
“Long-term savings providers will continue to work hard to reunite people with their lost money. People deserve all the cash they are entitled to. To ensure more people than ever are reconnected we will continue to work with Government to explore ways data can be used to verify customer addresses.”
The ABI commissioned a behavioural science project with Trinity McQueen to understand behavioural nudges that could prevent customers from becoming “gone-away” customers and to encourage “gone-away” customers to respond to their providers’ reconnection communications, usually a letter to their new address.
The research was conducted with 2000 participants through a series workshops and a survey representative of the UK in terms of age, gender, region and social grade. The aim was to understand consumers’ attitude towards lost pensions and the best way to communicate with them.