People tend to be changing jobs more often than ever before and picking up more pension pots along the way. At the same time, almost a quarter of UK adults (22%) are not aware they can consolidate their pension pots, according to new research1 from Standard Life, part of Phoenix Group.
As people turn their attention to tracking down missing pension pots on National Pension Tracing Day this weekend, some may consider consolidating multiple funds into just one pension. However, Standard Life’s Retirement Voice report, conducted among more than 6,000 people in the UK, highlights significant knowledge gaps around the option to combine pensions together.
More than one in ten (12%) are only vaguely aware of the option to consolidate, while 21% have heard about it but not in any detail. Only 20% are fully aware of pension consolidation.
Consolidating can be simple
More than three quarters (77%) of those who have combined pensions said they found it easy.
Meanwhile, those who have not consolidated pensions put this down to:
• Not knowing how to (25%)
• Being scared of making a mistake which might negatively affect retirement income (13%)
• Thinking it’s complex (8%)
• Thinking it’s risky to have all pension pots in one place (8%)
Gail Izat, Managing Director for Workplace at Standard Life, part of Phoenix Group commented: “The success of auto-enrolment has seen over 10m more people save for their retirement, but when they move jobs they are increasingly likely to have a number of small pots which can be tricky to keep track of. Our research shows many people are unaware of their option to consolidate all their pensions into one pot which is why addressing the issue of small pots is high on the government’s pensions agenda.
“In the meantime, both employers and providers can help people stay on top of all their pension pots through relevant, targeted communications throughout their career. Retirement savings are part of the larger financial jigsaw, and enabling people to gain a complete view of their financial situation and options, perhaps through an open finance tool that sits alongside financial education, will keep pensions on people’s radars and reduce the chances of them losing them as they change employer. Consolidation might not be right for everyone, but it can lead to lower charges and increased engagement for many and its good for people to know the choice is there. A good starting point is engaging with Pensions Tracing Day, and encouraging people to use their extra hour on Sunday 29th October to have a look at the Government’s Pension Tracing Service.
|
