New group comprised of government and pension industry
representatives to look at helping savers track their pensions.
Members will discuss the design and implementation of the
proposed new consolidation system as part of new Small Pots
Delivery Group.
This represents a vital step in delivering greater value for
money which could benefit the average saver by £700 at
retirement.
A new group designed to help savers track their pensions was
launched yesterday (7 February) by Pensions Minister .
The new system is designed to put savers first and ensure a
better functioning pension market. It involves a small number of
authorised schemes working to consolidate small pension pots on
behalf of savers.
Pensions Minister said:
Deferred small pots are costly, inefficient, and hard to keep
track of.
This group will help in crafting a cost-effective and efficient
system, ensuring better financial security and greater value for
money for millions of savers.
Deferred small pots are small pension pots left inactive, often
from a previous job, and typically contain small amounts of
money.
Currently, these are a drag on the pension system making it
harder for people to make informed decisions about - and keep
track of - their pension, reducing the amount they may have in
retirement. Some savers even lose track of their pots altogether
due to having multiple pots from different jobs.
The successful introduction of Automatic Enrolment in 2012
brought millions of workers into workplace pension saving, often
for the first time. In 2022 for example, employees across the UK
saved £116 billion into their pensions - a real-terms
increase of £29 billion compared to 2012.
However, with this has come rapid growth in the number of
deferred small pots - without intervention this could result in
annual administrative costs by 2030 of up to £225 million.
Helping to deliver on the chancellor’s Mansion House reform
package, the new Small Pots Delivery Group will provide
recommendations on how best to implement the proposed multiple
default consolidator approach - which was set out in the
government’s consultation response in
November 2023.
Further Information:
