Almost a quarter (22%) of consumers are unaware of the option to consolidate their pensions, leading to an estimated £26.6bn left sitting in lost pots, Standard Life has found.

The firm’s retirement voice report, which surveyed more than 6,000 people in the UK, also found that a quarter (25%) of people who haven’t consolidated their pension pots put this down to not knowing how.

Just over one in 10 (12%) said they are vaguely aware of the option to consolidate, while 21% have heard about it but not in any detail.

Overall, just 20% of people have said they are fully aware of pension consolidation.

Managing director for workplace at Standard Life, Gail Izat, said: “The success of auto-enrolment has seen over 10 million more people save for their retirement, but when they move jobs they are increasingly likely to have a number of small pots which can be tricky to keep track of. Our research shows many people are unaware of their option to consolidate all their pensions into one pot which is why addressing the issue of small pots is high on the Government’s pensions agenda.”

The report comes ahead of national pension tracing day, and Standard Life has outlined ways to track down missing pots and what consumers should consider about consolidating.

Of those who have combined their pensions, over three quarters (77%) said they found it easy.

For those who have not consolidated their pension pots, 13% said they were scared of making a mistake which might negatively affect their retirement income. Other reasons included thinking the process was too complex and thinking it is risky to have all pension pots in one place, with 8% stating these opinions respectively.

Izat continued: “Both employers and providers can help people stay on top of all their pension pots through relevant, targeted communications throughout their career. Retirement savings are part of the larger financial jigsaw, and enabling people to gain a complete view of their financial situation and options, perhaps through an open finance tool that sits alongside financial education, will keep pensions on people’s radars and reduce the chances of them losing them as they change employer.

“Consolidation might not be right for everyone, but it can lead to lower charges and increased engagement for many and its good for people to know the choice is there. A good starting point is engaging with pensions tracing day, and encouraging people to use their extra hour on Sunday 29 October to have a look at the Government’s pension tracing service.”

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