10 November 2011
The Department of Work and Pensions is set to publish a
consultation paper on consolidating smaller pension pots next
month.
Speaking at the Personal Finance Society annual conference,
pensions minister Steve Webb said the DWP will be consulting on the
different models that could be used to aggregate smaller pots.
He said some of the models being considered include the pension
pot moving with an individual as they change jobs, or alternatively
on changing jobs the pension pot gets left behind and, unless the
individual opts out, the money would be automatically transferred
to a central aggregator fund.
Webb said: "The idea is that instead of having all of these
fragmented pots that do not buy people pensions, there is one big
packaged pot.
"Firstly that raises the visibility of pension saving. People
would see a figure of £20,000 rather than 10 figures of
£2,000, which makes them think more about what you can get
for it. And then at the point of turning it into a pension they get
better value for money.
"We already know that schemes, occasionally slightly carelessly,
lose people. All the hassle is taken out is if we can have
consolidation of smaller pots in some way shape or form. So we will
be consulting on that next month."
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