Figures released by the government shows up to £400 million in unclaimed and forgotten money remains in pension funds, denying people of much-needed retirement income.
Between 2005 and 2010, 350,000 people approached the Department for Work and Pensions for pension tracing service, while 82, 587 requests were received in 2009-2010 from people for tracing their missing pensions.
Data showed that 20 percent of applicants managed to locate their missing pensions while 7 percent traced a lost pension which paid more than £20,000 in lump sum.
DWP estimated an additional £400 million could be lying unclaimed in forgotten investments in pensions and life assurance schemes.
As people’s working pattern changes, locating missing pensions is becoming an important issue for advisers and clients, said Steve Latto, head of pensions at Alliance Trust Savings.
“People now tend to have several jobs in their working lives and various pensions along the way so there is an opportunity to consolidate those pensions. However many people do not do this until they near retirement and then there is a danger that they will not remember what pension arrangements they had for jobs they did 20 or 30 years ago”, said Latto.
Alliance Trust’s Select SIPP offers clients the opportunity to consolidate their pension pots into one plan.
Commenting on the firm’s product Latto said: “We chose to have a flat-rate charging structure with an annual fee and transaction charges, while passing on fund rebates to clients in full. Other firms operate a slightly different charging model but, from a pension perspective, a 0.75 per cent rebate can amount to quite a lot over a 30-year period”.
The product has been designed keeping in mind the RDR (Retail Distribution Review), he said. “We felt it was fairer to levy charges that reflect costs associated with us in terms of administration. We are also conscious of RDR and the drive to ensure there is proper transparency and visibility of charges so this type of model fits with the way regulation is heading”, Latto added.