Three-fifths (59%) of people are unaware of the benefits pension consolidation can bring, according to research from Aegon.
Nearly two-fifths (37%) of the population have more than one pension pot, but an additional fifth (22%) are unaware how many pots they have, meaning the number of people with multiple pension pots could be even greater.
By the time auto enrolment is complete in 2018, it is estimated that around 9 million workers will either be newly saving or saving more into a workplace pension – this means that the number of people with multiple pension pots is likely to see an increase in the next two years.
When asked about consolidating their pots, 15% wrongly believe it would have a negative impact, resulting in higher management fees. A quarter (25%) correctly believe it will reduce fees, while over three-fifths (66%) of those nearing retirement (45-65), are completely unaware of the benefit this consolidation will have on fee costs.
Mark Till, Managing Director, Aegon UK Direct, said:
“With 92% of the UK working population still falling short of their retirement targets, the need to consolidate multiple pension pots is more important than ever before. By not doing so, people incur multiple management fees from the different pension providers. These eat into the value of retirement funds, and people need to start understanding that such a move can only be a cost-effective one for them.
“Consolidation also makes engagement more efficient. It is nonsensical for people to have consumer packages such as broadband, or utility packages in their daily lives, but not want the same for their pension. When pots are spread widely it can stifle engagement and lose you money you didn’t know you had, so in a sense, more pension consolidation in the country can help drive up engagement and awareness with pension provisions. The way forward for the government and industry alike is digital engagement."