The impact of the coronavirus pandemic on the UK labour market will cause a significant increase in the number of dormant pension pots in 2020, with defined contribution (DC) schemes most affected.
Research from PensionBee released today (3 June) shows the number of dormant DC pensions will rise to 15.1m this year from 10.2m in 2019 - an increase of 48%.
A 32% increase in dormancy is expected across all types of pension scheme, up from 16.3m in 2019 to a projected 21.5m this year.
Regular job switching and sector-driven career changes in line with the "unprecedented transformation" of the economy this year will be the driving force behind the increased statistics, the research showed.
PensionBee recorded a 24% year-on-year increase in first-time pension transfers for April for DC and defined benefit (DB) schemes. Chief executive Romi Savova said: "As the UK economy transforms in the wake of Covid-19, changes to the labour market will be inevitable and the likelihood of people losing or abandoning their pension pots when they leave jobs is even greater."
The provider found there are currently 1.1m individuals with active private DB workplace pensions - a similar number as in both 2018 and 2019. The number with active DC plans is currently 10.4m up from 9.9m in 2018, while 90% of workers in the UK have active DC pensions.
The Pensions and Lifetime Savings Association (PLSA) has published a drafting template to help defined contribution (DC) scheme trustees produce their annual chair’s statements.
Nest members are making changes to their everyday lives to be more environmentally or socially responsible, but failing to take the same action on their pensions, the provider says.
Gregg McClymont says AE schemes make it easy to opt-out should members feel contributions are not in their best interest
Trustees of defined contribution (DC) schemes redirecting contributions made during Covid-19 to alternative funds should check they’re not unintentionally breaching pension legislation, The Pensions Regulator (TPR) warns.
Thousands of the country’s most financially insecure individuals are remaining in auto-enrolled schemes even if it may not be in their best interests to do so, the Institute for Fiscal Studies (IFS) finds.