Younger workers risk losing track of pension pots

A huge number of deferred pension schemes for younger workers have built up throughout the pandemic, and there are concerns that people will struggle to keep track of several pension pots as the economy slowly shifts back to fuller employment, according to pensions consolidator Zippen. 

Figures from the Office for National Statistics showed that UK unemployment levels in May 2021 stood at around 4.8 per cent of the workforce, with 772,000 fewer workers on payrolls than when the pandemic began.

The data also showed that 2.6m people are now on unemployment benefit compared with 1.4m in March 2020 before the crisis — some of these are still working but are on very low wages.

Zippen founder and director Stuart Feast pointed out that with job vacancies on the rise and economic indicators broadly positive, workers needed to pay more attention to the benefits they have built up. 

According to research conducted by the company in March 2020, prior to the pandemic, more than half of all young workers had no idea whether they had a workplace pension, while 54 per cent of 18 to 24-year-olds reported they either did not have or were unsure as to whether they had been enrolled into a workplace pension. 

A further 45 per cent were unable to confirm how many pensions they had. 

Though the pensions dashboards, designed to show workers how many pension pots they have and who manages them, will help workers keep track of their arrangements in the future, it has yet to receive a formal launch date.

With that in mind, Feast commented: “In other words, millions of workers, both young and old, are still in the dark about the entire workplace pension concept, which might not be a problem in the immediate term, but could create serious issues further down the line.”

He added: “Many workers are worryingly unaware that pension pots do not automatically move as they move jobs, which means that for those in the ‘gig’ economy, future employees may end up with dozens of small pots of money that are difficult to manage and keep track of.

“As we move into a post-pandemic economic phase, keeping track of your pension pot has never been more essential.”