The average value of assets held in a workplace defined contribution (DC) pension pot at retirement fell by 43 per cent year-on-year to £5,500, as of January 2020, according to Salisbury House Wealth.

The firm stated that the decline could partly be explained by employees changing jobs more regularly than previous generations, leading to savers having multiple, smaller pots.

Consolidation was cited as an option to nullify the risk of savers forgetting pension pots as they move jobs, although Salisbury House Wealth noted that it was “critical” DC savers received professional advice beforehand.

“Auto-enrolment is doing a great job but cannot be solely relied upon for retirement income,” said Salisbury House Wealth managing director, Tim Holmes.
 
“The figures support just how crucial financial planning is to help ensure that today’s workers are able to enjoy a retirement that they deserve. Long-term planning holds a critical importance if an individual is to achieve their financial goals.

“Auto-enrolment of workplace pensions since 2012 has meant many people have several different pension plans with several different providers. It might be prudent to consolidate all of them into one single pension so they are easily accessible upon retirement, providing they do not miss out on any attractive benefits.

“Future retirees need to seek professional advice before making a final decision on whether to consolidate.” 

Salisbury House Wealth noted that, although the average assets held per pot at retirement had fallen, membership schemes with 12 or more members increased by 17 per cent between January 2019 and January 2020.

Furthermore, there were over 19 million members of occupational DC schemes in January 2020 and this figure has grown every year since 2013.

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