New analysis from leading online pension provider, PensionBee, reveals that customers over the age of 40 have, on average, £37,100 saved for retirement. These savings have been accumulated by consolidating, on average, two pension pots with the provider, in addition to making extra contributions. In contrast, PensionBee’s younger customers (under the age of 40), have, on average, £11,200 saved for retirement, yet have also consolidated two pension pots.
While this inequality in pension wealth is to be expected, the identical number of pots held by these age groups highlights the growing trend for younger workers to move more quickly between jobs than previous generations. The Department for Work and Pensions estimates that today’s average workers will have 11 different jobs in their lifetime, and as a result of greater mobility in the workforce, alongside the introduction of Auto-Enrolment in 2012, it’s expected that younger workers will exceed the number of pension pots held by their predecessors (1).
In the context of the ‘Great Resignation’, where a significant number of workers are currently thinking about, or in the process of changing their job, PensionBee research found that more than half (51%) of respondents who are looking for a change, already have several pensions from previous jobs (2). Of those respondents, the majority (54%) were workers under the age of 40.
Yet amidst this change, when asked how they manage their pensions, just under half (44%) of workers of all ages showed a preference towards combining their pots when leaving former jobs. The view that pension consolidation is a “very complicated process” appeared to be a significant barrier for a majority (66%) of savers. Perhaps as a consequence of this, two-thirds of savers revealed that they didn’t know how much they had saved across their pension pots.
Clare Reilly, Chief Engagement Officer of PensionBee, commented: “Our latest analysis reveals that younger savers are, as predicted, on track to accumulate a greater number of pension pots than older workers over their lifetime. While it’s evident that a significant number of savers, across all ages, are taking advantage of the benefits of consolidation, there’s still more work to be done to improve consumers’ understanding.
Demystifying the pension consolidation process is essential to ensuring all savers are well-prepared for their future retirement. This is most important for our youngest workers who will have more pots than ever to manage and keep track of.”
Appendix
Table 1: Average pension pot size per age group and pensions consolidated
| Age group | Average number of pensions consolidated | Average pension pot size |
|---|---|---|
| Under 40 | 2 | £11,200 |
| Over 40 | 2 | £37,100 |
Source: PensionBee, December 2021. Based on over 100,000 PensionBee customers who signed up before October 2021, allowing three months for any pension transfers to be completed.
Table 2: UK consumer attitudes to job switching
| Which of the following applies to you? | Respondents under the age of 40 | Respondents over the age of 40 |
|---|---|---|
| I don’t have any plans to leave my job for the foreseeable future | 30% | 38% |
| I’m planning to change my job within the next 12 months | 29% | 25% |
| I’d like to change my job but don’t have any plans to do so yet | 25% | 23% |
| I’m planning to change my job when the economy recovers | 11% | 8% |
| I’m not currently employed due to another reason, e.g. I’ve retired, studying, caring | 3% | 4% |
| I’m not currently employed because I’m between jobs | 2% | 3% |
Source: PensionBee, August 2021. Respondents: 500. Numbers have been rounded.
Table 3: UK consumer attitudes towards consolidating pension pots when changing jobs
| Strongly agree | Agree | Neither agree nor disagree | Disagree | Strongly disagree | |
|---|---|---|---|---|---|
| I tend to combine my pensions into one pot whenever I change jobs | 15% | 29% | 26% | 22% | 7% |
Source: PensionBee, August 2021. Respondents: 500. Numbers have been rounded.
Table 4: UK consumer attitudes towards the process of consolidating pension pots
| Strongly agree | Agree | Neither agree nor disagree | Disagree | Strongly disagree | |
|---|---|---|---|---|---|
| I’d like to bring all my pensions together into one pot but it seems very complicated | 21% | 45% | 22% | 8% | 3% |
Source: PensionBee, August 2021. Respondents: 500. Numbers have been rounded.
Table 5: UK consumer attitudes towards total pension value
| Strongly agree | Agree | Neither agree nor disagree | Disagree | Strongly disagree | |
|---|---|---|---|---|---|
| I don’t know how much I’ve saved in total across my pension pots | 27% | 39% | 14% | 15% | 5% |
Source: PensionBee, August 2021. Respondents: 500. Numbers have been rounded.
Footnotes
