Dormant pensions likely to exceed 20m in 2020 – PensionBee

The number of dormant pension pots in the UK is set to rise by 32 per cent and exceed 20 million in 2020, according to PensionBee.

The provider estimated that the Covid-19 crisis will increase the number of dormant pensions left behind by savers from an estimated 16.3 million in 2019 to 21.5 million in 2020.

It found that defined contribution (DC) pensions are the fastest growing type of dormant pots, and it estimated that the number of dormant DC pensions would rise by 48 per cent, from 10.2 million to 15.1 million, in 2020.

PensionBee said that the pandemic was likely to result in the number of abandoned pots increasing as it has caused unemployment to rise which, in combination with regular job switching and sector-driven career changes as the economy “undergoes an unprecedented transformation”, would increase the likelihood of savers inadvertently abandoning their pots.

However, the provider stated that those taking action to consolidate their pensions would help decrease the likelihood of creating dormant pots and said that it recorded a 24 per cent year-on-year increase in first-time pension transfers in April.

Despite this, it warned that consolidation may not always be the best solution for savers, and those with defined benefit pensions worth over £30,000 were advised to seek independent financial advice.

Commenting on the findings, PensionBee chief executive, Romi Savova, said: “As the UK economy transforms in the wake of Covid-19, changes to the labour market will be inevitable.

“While the reality is that individuals can’t control the labour market, one thing that is within their control is their pension. It might not be the first thing that people think about when leaving or changing jobs, but it should be up there on the list of priorities.

“As today’s research shows, the likelihood of people losing or abandoning their pension pots when they leave jobs is even greater. It’s important to find out where your pension is and consider if consolidating your pots is the right decision for you.”

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