Young people are increasingly struggling to save for retirement and are often unsure how much they have actually put aside for when their careers end – painting a less-than-positive picture of life after work.
According to new research from pension-finding platform, Raindrop, just shy of a fifth (19 per cent) of young people aged 18 to 34-year-old have no idea how much they have saved for retirement – almost double the figure for older people aged over 55 (10 per cent). Meanwhile, around 17 per cent of young people 18 to 34 know exactly where all their pension pots are.
Research from Scottish Widows also indicates that almost half (47 per cent) of young people aged 22 to 29 are currently on track for a less-than-minimum lifestyle in retirement – meaning they will not be able to cover their basic needs and face poverty in retirement the highest proportion of any age group.
Raindrop’s figures suggest that this pension gap will continue to widen as younger people not only face struggles to save for retirement but are also at risk of losing pension pots as they continue to progress their careers.
An estimated £31.1billion is sitting in lost pension pots, according to research from the Pensions Policy Institute (PPI). There are almost 3.3 million lost pots in the UK, with an average value of nearly £9,500.
Vivan Shridharani, co-founder and CCO at Raindrop
Vivan Shridharani, co-founder and CCO at Raindrop, said: “Billions of pounds are already wasting away in lost pots – millions of young savers risk losing track of pension savings as they increasingly switch roles every few years and start paying into new pots. The traditional career path of a company for life and just one pension is virtually extinct – the number of lost pension pots is accelerating partly as a result of more flexible and diverse career choices of younger employees.”
Tracking down old pension pots
Younger workers appear much more likely to accumulate more pension pots over the coming years which risks worsening the lost pots issue. Thirty per cent of people aged 18 to 34 have already had three or more jobs in their careers and are therefore likely to have multiple pension pots whilst 17 per cent plan to move to new roles every few years compared to just two per cent of workers aged over 55.
In an effort to resolve these challenges, the government is planning to launch a pension dashboard in October 2026 that will enable people to locate lost pots – although the service has already faced a number of delays and many young people (19 per cent) say they don’t want to have to wait until then (or beyond) to use a pension-finding service.
A similar proportion (18 per cent) say they would rather use a solution offered by their bank or pension provider than the government’s platform.
Shridharani added: “Pension-finding solutions can play a key role in solving the lost pots crisis, supporting with consolidation and helping people achieve the retirement they want.”
Raindrop’s technology enables savers to locate lost pots by working with banks, pension providers and financial advisers including AJ Bell, Monzo and Standard Life. Since its launch, Raindrop has located over £440million in lost pension savings across almost 40,000 pots.
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