Older savers less likely to consolidate their pensions
21 January 2020
Older savers are two times less likely to consolidate their pensions, despite being the age group with the most pension pots, new research from Canada Life has shown.
According to the findings, just 31% of respondents over the age of 55 had considered consolidating their pensions, compared to 63% of 35-54 year olds and 72% of those aged between 18-34.
This is despite the fact 33% of older savers have more than one pension pot, above the average 31%, with as many as one in 10 (11%) over 55s having three or more pots.
In contrast, only 23% of younger savers under the age of 34 have multiple pots and just 4% have three or more separate pension pots.
Andrew Tully, technical director, Canada Life, said pension consolidation was driven by two factors. The first is the increase in auto-enrolment coverage and the number of people who will have accrued multiple pensions over their career, with research suggesting that the average worker will have had 11 jobs by the time they access their pension. The second is the demand for more flexible solutions to meet the expectations of the freedoms as people start to take income from their pensions.
Tully said: “Pension consolidation is a perfect advice opportunity so it’s interesting to see our research with the over 55s suggesting this group is the least likely to have considered it. This could be because of the mix of pension coverage with this group, namely DB and DC. Or it could be people are mentally compartmentalising their savings into various pots and spending priorities as they plan retirement.
“There are clear benefits to review and consolidate pensions, but it isn’t always the right move, as some older pension schemes may have valuable benefits that can be lost following a transfer, such as guaranteed annuity rates. An adviser will clearly be best placed to take a holistic view of a client’s wealth and priorities at-retirement and decide the best plan for the future.”
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