A person saving for a comfortable retirement could save over £140,000 by consolidating multiple pension pots into just one, new analysis from Quilter has found.

The wealth management adviser’s research showed that the average person works for six different companies during their lifetime, which would mean that they also have six different pension pots as a result of auto-enrolment.

Similarly, Quilter estimated that for someone to achieve a comfortable retirement of £33,000 a year from age 65 to 95, they would need to accumulate a pension pot of around £500,000.

Assuming that someone had six pension pots with six different providers – with around £83,300 in each that all charge different annual fees of 1.0%, 1.3%, 1.6%, 1.9%, 2.2% and 2.5% – someone could expect to have £1,076,852 after 20 years if they consolidated them all to the cheapest pot, compared to £936,747 if they didn’t consolidate. Quilter’s calculations also assumed modest investment growth of 5% per year.

Quilter pension expert, Ian Browne, explained: “Thanks to the success of workplace pension schemes, more and more people are putting money away for their retirement but because their pension pots don’t follow them these pots can lay dormant for years with annual charges eating away at their value.

“With a huge variety of different annual charges seen across the pension industry it is essential that pension savers understand what charges they are paying and whether they can consolidate their multiple pots into the most efficient and best value one as over the long-term this can make a material difference to how much they will have in retirement.

“The upcoming pensions dashboard may help users find and consolidate their pots. However, figuring out what represents the best pension pot for you isn’t solely down to fees and so it’s vital to get financial advice. There are scenarios where consolidation may not be the best course of action which is why professional financial advice is key.”

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