A significant number of older workers are unaware of how much they have saved for retirement, according to research by Cushon.
The study – from a whitepaper by the workplace savings and pensions fintech called Fixing the problem of multiple pension pots – found that 41% of employees aged over 55 aren’t sure how much they have saved, compared with almost three in 10 (28%) of all UK workers.
According to Cushon, the lack of clarity over the value of pension pots is “symptomatic of the low levels of engagement that still plague UK pensions”.
With employees aged over 55 having worked an average of six jobs in their careers, they will have paid into numerous pension schemes during that time. This, Cushon observed, can result in savers losing track of their pots altogether.
The research found that fewer than one in five (19%) employees have ever transferred one pension into another. A third (33%) said they didn’t know how, while almost a quarter (23%) didn’t know combining pots was possible.
Furthermore, almost one in five (18%) respondents thought combining pots would be too time-consuming, while around one in seven (15%) thought there would be too much paperwork involved, and a similar proportion (13%) thought it would be too expensive.
Evidence also suggests that employees are risk-averse when it comes to combining pots. One in five (22%) said they haven’t done so because they were worried they might be doing the wrong thing, while a similar proportion (18%) worried that it would be too risky to have all of their pension funds in one place.
According to Steve Watson, director of policy and research at Cushon, 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”.
He said: “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.”
Watson added: “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.”