3.6 million people lose track of pension savings, study finds

Over 3.6 million UK adults are unaware how many pensions they have and risk paying more in fees than necessary, according to new research by Scottish Widows.

The life insurance and pensions company has called for action to help these savers get control of their finances, and at the same time make the pensions system more efficient.

The research, carried out across a total of 5,010 adults, indicated that the number of workers with small pension pots of under £1,000 has surged dramatically in recent years, with auto enrolment allowing millions of people to benefit from workplace pensions for the first time.

However, with the average employee now changing jobs 11 times in their working life, people are increasingly building up many small pots and are often losing track, misplacing paperwork or forgetting about previous schemes they are invested in.

While savers already have the option of combining their pensions, Scottish Widows found that one in 10 (10%) have no idea how to do this, while 12% say it’s just too much hassle. As a result, more than two fifths (44%) said they’ve never bothered to track down savings from a previous employer. 

However, 72% of UK adults would now support the introduction of a new system that would automatically consolidate small pension pots as they move jobs, reinforcing strong support from the industry for the change.

Scottish Widows head of pensions policy, Pete Glancy, commented: “Auto-enrolment has been a roaring success because it didn’t require people to take any action. A similar approach to auto-consolidation could be equally successful.

“It would reduce the number of savers paying multiple fees unnecessarily, and could also help the industry reduce costs, meaning the fees paid by savers would fall too.

“This new research shows that people are warm to the idea of a government intervention that would act to promote their best interests. Undoubtedly, consolidating a savers’ pensions into one pot would bring them much closer to their money, increasing the sense of ownership and control.”

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