With working Brits already not saving enough, the Association of British Insurers (ABI) says the current pension system further fails individuals who change jobs or their pension provider during their career, picking up a number of small individual pension pots as a result.
New research compiled by the ABI finds 62% of employees do not continue to pay into their first pension pot when they change jobs.
And, the ABI says, 21% of working people aged over 50 have three or more private pensions.
It says pensions providers and the government need to formulate a system whereby savers can consolidate their money into fewer, but bigger individual funds, as it says the ‘proliferation’ of pensions is complicating the pension system and proving costly for consumers.
The ABI says this also causes the difficulty to firms who have to administer many pensions, which all contribute to a lower savings and incomes in retirement, which is then exacerbated by changes to pensions legislation and increased labour mobility, taking the numbers up even further.
The ABI proposes three new measures, to be sent to the Pensions Commission, namely:
Helen McCarthy, head of pensions and savings development at the ABI, believes such initiatives including auto-enrolment could potentially impact on levels of pension saving and improved value for consumers.
McCarthy says: “Neither the government nor the pensions industry has so far appreciated the full impact of this unnecessary complexity on consumers. It is time that we introduced more simplicity, better service and greater choice.”
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