The impact of the Coronavirus pandemic on the UK labour market will cause a 32 per cent increase in the number of dormant pension pots in 2020, according to research.
Analysis for consolidator PensionBee – which combines data from multiple sources on pensions with unemployment predictions – concluded Covid-19 will increase the number of dormant pensions from an estimated 16.3m in 2019 to 21.5m in 2020.
The provider explained defined contribution pensions, which include auto-enrolment, were the fastest growing type of dormant pension, with an expected increase of 48 per cent, from 10.2m dormant pots in 2019 to 15.1m in 2020.
At the same time, the Bank of England has estimated that the unemployment rate will increase from around 4 per cent to 9 per cent due to the impact of the Coronavirus pandemic.
Combined with regular job switching and sector-driven career changes as the economy undergoes an unprecedented transformation, it is likely that many more savers will inadvertently abandon their pension pots unless they take action to consolidate, PensionBee stated.
The pension provider recorded a 24 per cent year-on-year increase in first-time pension transfers for the month of April, indicating many consumers are using their time during lockdown to sort out their finances and consolidate old pension pots.
Romi Savova, chief executive at PensionBee, 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.”
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