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Older savers least likely to consolidate multiple pension pots

Older savers aged 55 and above are more likely to have multiple private pension pots (33% vs. 31% of all UK adults with a private pension) but are the least likely of any age group to have considered consolidating them (31% vs. 58%), new research from Canada Life1 reveals.


The findings highlight the valuable role that advisers can play in helping savers to get the most out of their pensions as they approach retirement, especially given the average UK worker will have had 11 jobs2 by the time they look to access their pensions.


Savers may be looking to consolidate all of their pension savings in one place for simplicity and flexibility, suggests Canada Life.

While only 23% of younger savers aged 18-34 have multiple pots, this rises to 33% of those aged 55 and above, including 11% who have three or more pots.


However, while nearly three quarters (72%) of younger savers with multiple pots have considered consolidating them, this falls to less than a third (31%) of those aged 55+.

   Average  18-34  35-54  55+
Have more than one pot  31%             23%           36%            33%          
Have three or more pots  10%  4%  14%  11%
Have considered consolidating their multiple pots  58%  72%  63%  31%

Base: UK adults with a private pension


Andrew Tully, technical director, Canada Life commented:


“Pension consolidation behaviour is likely to be driven by two factors. The first is the increase in auto-enrolment coverage and the number of people who will have accrued multiple pensions over their career. The second is the demand for more flexible solutions to meet the expectations of the freedoms as people start to take income from their pensions.


“Pension consolidation is a perfect advice opportunity so it’s interesting to see our research with the over 55s suggesting this group is the least likely to have considered it. This could be because of the mix of pension coverage with this group, namely DB and DC. Or it could be people are mentally compartmentalising their savings into various pots and spending priorities as they plan retirement.


“There are clear benefits to review and consolidate pensions, but it isn’t always the right move, as some older pension schemes may have valuable benefits that can be lost following a transfer, such as guaranteed annuity rates. An adviser will clearly be best placed to take a holistic view of a client’s wealth and priorities at-retirement and decide the best plan for the future.”

 

Source:

1. Research conducted among 2,000 UK adults (including 1,222 with a private pension) in August 2019.

2. ABI article: The UK’s lost pension mountain could be worth £20 billion – at least six times higher than previously estimated

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Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

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Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.