Around 88 per cent of people with workplace pensions have at least one pension that remains unclaimed and there is an estimated £26.6bn of lost pension pots in total, according to new research from Moneyhub.
Meanwhile, around one in eight or 13 per cent of pension savers don’t think it is worth their time and effort to combine pensions, with a further 14 per cent preferring to actively leave their pension pots separate,
These problems are exacerbated by difficulties finding lost pension pots and a lack of understanding; 8 per cent of people are unaware that they can combine pensions. While 23 per cent intend to consolidate in the future, only 13 per cent have already done so. The concept of consolidation was most popular with people aged between 25 and 34, with 16 per cent already having done so, and 42 per cent planning to.
Moneyhub recommends commercial dashboards that include consolidation, retirement modelling, and a thorough financial picture to enhance retirement results.
Moneyhub Personal Finance Technology MD Mark Horwood-James says: “Structural challenges within the UK pension market such as fragmentation and low consumer engagement are driving inefficiencies and undermining savers’ ability to achieve decent retirement savings. With workers having longer careers and numerous roles over the course of their working life, they are ending up with multiple pensions.
“The research is clear. There is a troubling inertia when it comes to consolidating multiple pots. Combining pensions into one can make it easier to manage; from having more choice over your investments to paying lower fees. The Government’s Pensions Dashboard will be a great milestone; it will however be the providers that embrace Open Finance technologies, like Moneyhub’s, alongside the dashboard, that will be the winners.
“They will be able to break down the barriers to engagement and ease the process of consolidating pension pots. Commercial dashboards will allow users to see their pensions alongside all their other financial products enabling them to have sight of the whole of their financial universe, make more informed financial decisions and take action, which in turn will create better later life financial outcomes.
“Moneyhub’s Personal Finance Technology platform, used by the likes of Aon, Mercer, and Standard Life, is already able to help consumers find their pensions and help them better understand what they can expect when it comes to their retirement finances.
“Tools like our retirement modeler can help users plan and adjust their habits utilising their individual saving and spending data. While the industry waits on the delivery of the government’s dashboard and central architecture, the technology to facilitate a dashboard experience and the follow-on actions needed is already available.”
