Pots of Money?
One of the most commonly cited statistics associated with the discussion of small pots and their consolidation is that we hold, on average, eleven jobs in a working lifetime – and that this number is tending to increase, that there is greater job mobility. However, a search for the original source of this figure proved fruitless.
There is a reference in a US Congressional Budget Office publication to this number for the US but again no source even there. The closest that we could come was the December 2011 DWP paper “Meeting future workplace pension challenges: Improving transfers and dealing with small pension pots”. This contains the following figure
The reference cited in the paper referred to in note 16 above is again the DWP:
So, this figure of eleven jobs in a working lifetime is a modelled simulation not an empirical fact.
The ONS does collect statistics on job transfers in the annual survey of hours and earnings (ASHE)
The following figure is taken from its April 2019 Compendium Analysis of Job Changers and Stayers
These are changes of job rather than change of employer, which would be the relevant consideration for the number of pension pots. The ONS reports that 75.4% pf these changes are changes of employer. This would result is an average of just 3 jobs in a working lifetime. Even if we allow for the differential rates of job change at different ages (illustrated below) we do not get above an average of 3.5 jobs per working lifetime.
The discrepancy between these two sources is material – 11 jobs versus 3.5, we need to resolve the difference if we are to base policy and business plans on consolidation of small pots soundly.
While we are at that we should also examine the proposition that the pandemic has resulted in different employee behaviour. There is evidence that this is true of the US labour market (see below) – and anecdotal evidence that it may also be true here, though perhaps not to the same extent (and of course confused by Brexit effects).
One of the issues that small pots consolidation will have to consider is that of international mobility. There are quite a lot of people who have built up a small pot through auto enrolment and have then left the UK, probably never to return. They may well not have given new contact details to the pension provider. If small pot consolidation requires approval by the “owners” of those small pots, there is going to be a problem. I haven’t yet seen any attempt to quantify the scale of this problem.
Glad someone else has picked up on this at last. The figure of 11 comes from a study by the US bureau of labor statistics. The study was specifically of a group of baby-boomer, blue-collar workers and included changes of role or position within the same organisation. I’ll dig up the link and post it later if I can find it again…
This should tell you a bit more about the original study, which started in 1979: https://www.bls.gov/news.release/pdf/nlsoy.pdf
It was called the ‘National Longitudinal Survey of Youth, 1979’.
So members of pension schemes in the UK may well end up having 11 pension pots, but that’s a guess. To base that on this study seems odd, at best. The study was US based and looked at people born between 1957 and 1965. And, as I said above, it included changes of role within the same organisation.
I’ll leave you to decide how relevant that is for working how many pension pots a UK-based millennial or Gen-Z person will have.
Excluding war service, my father (born 1920) had three employers. I was born in the early 1960s and have had far more jobs and even more pensions. Sometimes employers were bought/sold/reorganised and the pension wasn’t transferred and sometimes new arrangements were set up, eg DB to DC trust, DC trust to GPPP.
I retain deferred membership of two DB schemes and one employer DC scheme, but have lost count of how many DC arrangements I have had over the years (I have consolidated all the old DC arrangements into a SIPP).
I doubt my experience is exceptional so find the average figure of eleven scheme memberships entirely credible.
I think schemes/employers could do more to help by being less reluctant to accept DC/DC transfers, and make the transfer process slicker (whilst retaining checks and controls). Given I think the risk of self-harm is slight when transferring between employer supported DC schemes, that would help people avoid their own small pots problem.
There’s also this, from “Enabling retirement savings for the self- employed: pensions and long term savings trials” December 2018 [https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/789480/enabling-retirement-savings-for-the-self-employed-pensions-and-long-term-savings-trials.pdf ]
20. Figure 3.7 shows that women tended to have a higher mean number of employments
than men: males with self-employment as their main activity in one year had, on
average between seven and nine jobs compared to self-employed females who had between seven and eleven jobs over a lifetime.
Figure 3.7: The mean number of employments worked in a lifetime by women and men, 2016
Worked more than one job Worked at least one job Not Self Employed Self Employed All UK
Female Male
[Sorry, I can’t copy the chart]
Source: DWP analysis of the Lifetime Labour Market Database (L2)
Thank you for the reference Joe – I really do not know what this figure should be – I have friends from university days who have had just a single employer and others who have hopped around all over the place. If we really are at 11 jobs that is almost 28% annual turnover – with which in mind I would want to be very cautious with respect to investments in my staff.