Two in five older workers are unaware of how much they have saved for retirement, prompting fears that millions of older UK savers are not ready for retirement and could be missing out on an opportunity to boost their retirement pots before it’s too late, according to workplace savings and pensions fintech, Cushon. 

The research shows that older employees have less clarity over the value of their retirement pension pots – 41% of employees aged over 55 aren’t sure how much they’ve saved compared to almost three in ten (28%) of all UK workers.  

These figures mark the launch of Cushon’s latest whitepaper named ‘Fixing the problem of multiple pension pots’.  

The lack of clarity over the value of pensions pots is symptomatic of the low levels of engagement that still plague UK pensions. However, this is an issue that takes root much earlier in employee’s careers - nearly a third of savers (28%) have already lost track of at least one pension by the age of 35. 

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 and have accumulated savings in several pots. This can be challenging to keep on top of and can result in people losing track of savings pots altogether.  

This also increases the risk of pension providers automatically de-risking pension investments too early as people don’t update each provider with their planned retirement date which impacts total savings. De-risking involves providers taking a risk-averse approach as members get closer to retirement often shunning higher risk investments – with the potential for higher returns – as much as 20 years before retirement which can negatively impact on financial outcomes.  

Employees with multiple pension pot should at least consider if consolidating their pensions into one pot is right for them. Having one pot can make it easier to manage their savings, understand how much they have and potentially maximise their outcomes in retirement – however, 86% of employees aged over 55 have never transferred one pension into another pot.  

To ensure older people are fully prepared for retirement, the industry and Government needs to do more to boost engagement and better support savers as they get closer to retirement. One of the key improvements should be a simplification of the transfer process including automatically transferring people’s accrued pensions when employers change workplace pension providers. Although the Government has proposed a solution for very small pots, there needs to be an approach for all pension pots regardless of size. 

Similarly, embracing digitisation and moving away from complex jargon and paper-based documents could reduce the barriers that prevent savers from consolidating pension pots. Again, Government has a role to play here by encouraging providers to improve digitisation and pushing through the delayed pensions dashboard. These initiatives would provide savers with greater insight into the value of their retirement pots. 

Steve Watson, Director of Policy and Research at Cushon said: “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.  

“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.  

“It needs both government and providers to take the lead here. 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. Also, the Government’s proposals on small pots, which we support, is great but the issue of lost pots is not just limited to small pots it’s an issue across the board. Providers need to be embracing technology and simplifying how savers engage with their pensions, by removing jargon and offering apps allowing people to easily manage their savings should be an industry standard.”