Could you be sitting on thousands of pounds without realising it?

Sarah Coles (0:00)

There is a huge amount of money there, that it might have your name on it. It is worth just checking to see what you've got that's missing.

Dan Coatsworth (0:07)

I think anyone listening to this podcast now is going, crikey, this is big stuff.

Sarah Coles (0:20)

Hello, and welcome to the AJ Bell Money & Markets podcast. I'm Sarah Coles.

Dan Coatsworth (0:25)

And I'm Dan Coatsworth.

Sarah Coles (0:26)

And coming up this week, could you be sitting on thousands of pounds without even knowing it? So we're going to look at the growing problem of lost pension pots and how to track them down.

Dan Coatsworth (0:35)

We'll also share some tax tips that people might want to consider before the budget, run through what could and couldn't be in chance's red box in less than two weeks time. And we also hear from someone from Invesco about how to get more people investing.

Sarah Coles (0:49)

Yes. And plus we've had another week of cyber attacks. I actually did get one of the cyber attack emails, which I kind of felt briefly like I was under attack personally. And we've also had inflation warnings. We've had bond market volatility, AI stock wobbles, activist investors, and a surprisingly quiet year for changes at the top of the UK's biggest companies. So we've got tons to get through. So let's just start with what might be the most important topic for a lot of listeners, which is that millions of pension pots have actually been lost or forgotten.

Dan Coatsworth (1:17)

Yes. We've got some new figures that show the number of lost pension pots has hit three million. So that's billions of pounds sitting in retirement accounts people have simply lost track of over the years. And I guess you have to ask the question, how on earth does this happen? Because surely people would notice they've actually lost a pension.

Sarah Coles (1:35)

Well, you would think so, but it's actually surprisingly easy to lose track. So basically, it's to do with what's known as this auto-enrolment scheme. So basically, when you start work, in most cases, you automatically join the pension scheme unless you specifically choose to not do so. And you start building a pension pot with wherever your employer has picked as the home for that scheme. Then when you leave, you move to a new employer with a different pension scheme and you start building it there. And so really, the problem is that people do tend to forget, especially if they haven't been somewhere a particularly long period of time, they just forget about these old pensions that are built up. So if you think about this auto-enrolment, it basically relies on the fact that people don't get around to canceling their contributions. So it relies on inertia in order to build up people's pensions. But that same inertia is the thing that means you just don't remember.

Like if you move house or if you update your email to think, oh, I must go and tell 10 pension companies my details. And so therefore they lose track of you and you lose track of them.

Dan Coatsworth (2:31)

So I think if someone had quite reasonably six or seven jobs during their career, I guess they could have six or seven different pensions just sitting around.

Sarah Coles (2:39)

Yes.

And I think one of the other things that in this piece of research was quite significant is the size of those pension pots. So on average, each pension pot is worth just over 6,000 pounds. But the older you get, the bigger those average lost pension pots tend to get. So it rises to over 10,000 pounds amongst those people who are aged 55 to 74 So once you've added them all up, that's really quite significant.

Dan Coatsworth (3:01)

I mean, this is sort of part of a bigger issue, isn't it? It's not just simply pensions that people don't realise that they've got and they can get their hands on.

Sarah Coles (3:11)

Yeah, absolutely. I mean, if you think about there's a scheme that the government launched a very long time ago now called the Dorman Asset Scheme.

And when that sort of started, it was actually just around savings. And so it basically was, you know, if you've not touched a savings account for forever and they can't get in touch with you, then there's a way of sort of putting that money to use by giving it to charities. Now, obviously, it sounds worrying that they've given your money away. You always have the right to get that money back. But yes, they are now obviously giving away huge sums to charity on the basis of just purely on those savings that people have lost. They've now actually extended it to pensions and to investments and to insurance related products, because there's so much money sitting in those as well. So if you look at the size of some of these unclaimed assets, one of the classics is premium bonds, because unless you set up for those premium bonds to either pay into your bank account, which a lot of people do, or buy new premium bonds, then they will just pay and will just be sitting there waiting for you to claim them. There's 128 million pounds waiting to be collected, which seems like quite a lot of winnings to me.