More than half (58 per cent) of UK adults have never consolidated a pension, despite over a third (36 per cent) of savers stating that they would be interested in bringing their retirement savings together, research from Aegon has revealed.

The most common reason cited by savers who had not consolidated their pensions was not wanting to put “all eggs in one basket” and a lack of understanding of the potential benefits.

However, the research found that there was support for the idea of a automated consolidation solution, with more than a third (34 per cent) stating that they would likely use such a system for a pension pot under £5,000.

The Small Pots Co-ordination Group is currently reviewing the possibility of an automated solution for low-cost transfers, as previously recommended by the Department for Work and Pensions' Small Pots Working Group, with the group's next stage to look at building the evidence base for future legislative changes to implement this.

The research, published ahead of National Pension Tracing Day on 31 October, also found that over a quarter (26 per cent) of UK adults have at least one pension pot of less than £5,000, while a further 15 per cent do not know if they have one or not.

However, there was some difference in what was perceived a 'small pension pot', as whilst 24 per cent of UK adults would consider anything below £5,000 a small pension pot, 25 per cent viewed anything below £10,000 as a small pension pot, and over a third (34 per cent) would consider anything below £25,000 a small pension pot.

Commenting on the findings, Aegon head of pensions, Kate Smith, emphasised that whilst consolidation can be the "simplest way to keep track of pension savings", the low number of savers taking advantage of this "isn't surprising given the low level of pension engagement and understanding in this area".

She said: “Having multiple pensions can make it difficult for people to keep track of their savings and provides challenges when understanding the full value of their retirement savings.

“The government’s small pot working group is looking into solutions to address the issues associated with the rise in small pension pots. This includes how to implement some form of automated consolidation which Aegon’s research shows is well supported.

“The inertia principle of auto-enrolment has been very successful in helping increase pension savings and this principle could be harnessed in automated solution to help tackle the small pot issue as well.

“Together with the pension dashboards programme, these solutions should offer savers a much clearer picture of their retirement savings and could be a major step towards improving pension engagement.”

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