Enlarge Pension hunting: Younger workers are expected to move jobs far more often and have many different pension pots, but what happens if someone loses one and doesn't claim it?
Steps are being taken to cut the number of lost workplace pension pots which are left stranded, or 'dormant', as workers move from job to job.
At current rates, the Department for Work and Pensions anticipates there will be 50 million dormant workplace defined contribution pension pots by 2050, which will contain £757billion in unclaimed cash.
Introducing a new 'pot follows member' regulation will mean pensions automatically follow workers when they join a different workplace scheme. It is anticipated this will cut the number of people with five or more dormant pots from one-in-four to just one-in-30.
But happens to the money invested in these stranded pots if they remain unclaimed once the holder reaches retirement age, or dies? This is Money put the question to two pension providers to discover what their policies are:
Jamie Fiveash, of B&CE, provider of trust-based People’s Pension scheme, said: 'With a trust-based pension scheme, governed by a board of trustees, any benefits that are not claimed by a member are held by the trustee in a "reserve account".
'This means that a member's pension is held separately and can be accessed easily by the trustee when they come to be claimed, either by the member or his/her dependents.
'According to current legislation, if a member's benefits still remain unclaimed for six years (from when they reach their selected retirement age, or after their death), the member will cease to be entitled to those benefits.
'However, the trustees can still decide - at their discretion - to pay all or part of the benefits to the member or another beneficiary.
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'At The People’s Pension, we will always do our utmost to trace a member if they’ve lost touch with us. Given the recent record keeping standards published by The Pensions Regulator in September 2012, any trustees that end up with a significant percentage of ‘untraced’ members/beneficiaries may come under further regulatory scrutiny.
'If beneficiaries cannot be reached and the money remains unclaimed, it will remain invested in our reserve accounts indefinitely until such time that we are able to trace a beneficiary.
'Like most pension providers, we actively encourage our members to make sure their personal details are kept up-to-date. With more and more workers regularly switching employers, and estimates of over £3billion in unclaimed pension funds now being quoted, it is vital that everyone takes a closer look at their pension savings.
'By making sure every pension provider has up-to-date records of current address (and where appropriate, an up-to-date nomination form in respect of any death benefits), members and policy holders will be able to make the most of all of their savings in retirement.'
Things are slightly different for contract-based defined contribution pension pots, which are schemes run by the insurers who provide the pension products.
A spokeswoman for Aviva said that the firm will make all possible attempts to trace the holder of the pension and, if they are no longer alive, any nominated beneficiaries or relatives who may be entitled to the pot.
In the extremely unlikely event that any of these people cannot be traced, there is a slightly longer period of dormancy than for trust-based pensions - 10 years - before the money gets paid to the state.
Do you need to worry about a lost pension?Adam Uren, of This is Money, said: Both these companies have made it explicitly clear that in the event a pension pot is dormant after a period of some years, they will make every effort to contact the pension holder or, if they are no longer alive, one of their relatives who could stand to benefit from their retirement savings.
They do give the impression that it is a rare occurrence for a pension pot to remain unclaimed, and even if they do, the pension administrators are not able to touch the money.
But with people working on average for 11 different employers during their working careers and with a prediction of 50 million dormant pension pots at current rates by 2050, some do slip through the net.
Old pensions from several decades ago in particular are more difficult to trace, as the companies running the workplace schemes may not exist anymore, or have been the subject of several takeovers. This is Money receives many emails from readers asking for help in tracing old pensions.
Records of such pensions should still exist, and we have put together this guide which can help you track down your forgotten savings which you can find here.
Information for beneficiaries about what happens to pension pots in the event the pension holders dies can be found on the HMRC website.