Almost a quarter of UK adults (22%) are not aware they can consolidate their pension pots, according to new research from Standard Life, part of Phoenix Group.
Standard Life’s Retirement Voice report, conducted among over 6,000 people in the UK, has highlighted the 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.
On the other hand 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, says: “The success of auto-enrolment has seen over 10 million 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.”