Savers are turning their backs on pension consolidation out of confusion, as a mere one in ten have sought financial advice in the past year, according to research.
Pensions fintech firm Dunstan Thomas found three quarters (74 per cent) of Generation Xers, aged 40 to 55, have never consolidated any of their pensions.
At the same time the firm’s 53-page report, out today, found just 9 per cent of the 2,011 Gen Xers surveyed had consulted an IFA in the past 12 months, with 84 per cent tending to make decisions about their pensions alone or together with their partner.
Almost half (44 per cent) said they would choose to not consult anyone at all, while 13 per cent relied on the national media’s personal finance pages for information.
Adrian Boulding, director of retirement strategy at Dunstan Thomas, said there was an opportunity for IFAs to offer a service to employers in which they advise new staff on their existing legacy pensions.
Mr Boulding said: “This is becoming increasingly important in the auto-enrolment world because your pot does not follow you automatically. So, you’ll inevitably be leaving another AE pension pot behind you when you move jobs.
“As working patterns become more flexible, the average of 2.1 pensions per person amongst Gen Xers will only rise unless a pensions consolidation advice service is offered via employers. Offering it in the workplace could make it more cost effective and timely for both parties.”
Mr Boulding believes the number of dormant pots and unconsolidated pensions is likely to surge this year as more people are made redundant on the back of Covid-19.
The research found more than a third of Gen Xers (37 per cent) who have been exposed to four or more compulsory redundancy events in their working lives have four or five unconsolidated pensions already.