Two in five older workers are unaware of how much they have saved for retirement, suggesting that millions of older UK savers could be missing out on an opportunity to boost their retirement pots, according to Cushon.
According to the study, older workers are less certain of the worth of their retirement pension pots: 41 per cent of workers over 55 are unsure of how much they have saved, compared to 28 per cent of all UK workers.
Cushon says that this is a problem that develops far earlier in an employee’s career; by the time they are 35, 28 per cent of savers have already lost sight of at least one pension.
Employees over the age of 55 will have contributed to multiple pension plans and built funds in numerous pots because they have on average held six jobs throughout their lifetimes. Additionally, because people don’t inform each pension provider of their anticipated retirement date, which has an influence on overall savings, this raises the risk of pension providers automatically de-risking pension investments too early.
Cushon advises employees who have several pension plans to at least think about whether merging their pensions into a single plan is the best option for them. Having just one pot can make it simpler to manage savings, gauge how much money one has, and possibly maximise retirement outcomes; yet, 86 per cent of workers over 55 have never moved a pension from one pot to another.
Cushon says that the government and industry must do more to increase participation and provide better assistance for savers as they approach retirement if they are to ensure that older people are completely prepared for it.
It suggests a simplification of the transfer process, including the automatic transfer of people’s accumulated pensions when businesses switch workplace pension providers, ought to be one of the major improvements.
Cushon acknowledges that the Government has offered a solution for very small pension pots, but says there must be a strategy for all pension pots, regardless of size.
Cushon director of policy and research Steve Watson says: “Millions of older employees are sleepwalking their way into retirement with no idea of whether they’ll be able to afford the lifestyle they’ve spent decades working towards.
“Some of these savers will only be a few of years away from retirement and with many juggling multiple pots they not only risk losing track of them but make it harder for them to know if they have enough saved.
“It needs both government and providers to take the lead here. For government, pushing through the delayed introduction of the pensions dashboard is just a first step – supporting pot consolidation by allowing automatic transfers when employers change workplace pension providers would be a major leap forward.
“Also, the Government’s proposals on small pots, which we support, is great but the issue of lost pots is not just limited to small pots it’s an issue across the board. Providers need to be embracing technology and simplifying how savers engage with their pensions, by removing jargon and offering apps allowing people to easily manage their savings should be an industry standard.”
