David Brooks, Head of Policy at Broadstone, commented: “The DWP’s paper data on its Small Pots Delivery Group highlights the urgency of tackling this issue with the number of deferred pots across five large providers growing rapidly over the past few years from 8.3 million to 11.2 million. Consolidating small pots will make it simpler for savers to manage their pensions, especially in tandem with the Pensions Dashboard due to come on stream later this decade.”
Hannah English, Head of DC Corporate Consulting, Hymans Robertson, says: "We were pleased to see the announcement from the Department for Work and Pensions (DWP) this morning. It seeks to address the problem of small, fragmented pension pots by establishing a regime for the automated consolidation of small pots into default authorised consolidators. While this is a welcome step in the right direction, there are practical barriers such as the re-use of PDP infrastructure and processes which must be considered. The Feasibility Review will have to review these challenges carefully to surpass these barriers. We fully support any action to make change, and welcome the government’s role in working with the pensions industry to help build trust in the process and security of transfers, given the importance of member communications and the risk of scams. Looking ahead, the proposed deadline of 2030 for this consolidation to be in force would be a great achievement for members’ benefits if it is met. We look forward to seeing further insights in the forthcoming Pensions Bill and progression on the wide range of policy developments already in progress, as well as a clear timetable with detailed terms of reference for the second stage of the pensions review to address pensions adequacy of members.”
Pete Glancy, Head of Pensions Policy at Scottish Widows commented: "The proposal to consolidate small pots will help reduce industry operating costs and could lead to lower charges in the future for retirement savers. Reducing the number of smaller pots could also help boost engagement levels, with savers less likely to feel overwhelmed by the number of pots they have from previous employers. Higher levels of engagement should translate in the longer-term to better performance and improved decision making at the decumlation stage, as consumers become more informed. There's still a lot of work to be done sifting through the technical aspects needed to make this work, which could take time, but we will continue to work with the government as it progresses."
Lizzy Holliday, Director of Public Affairs and Policy at now:pensions: “We welcome the publication of the DWP Small Pots Delivery Group report – which builds on the discussions last year. We have long advocated for an automated solution to the small pots issue, and we have worked closely with government and industry to drive forward a resolution for savers. We believe the multiple default consolidator model works best for savers compared to other models explored as part of the overall policy development process - especially for those in non-traditional and transitory employment. It enables a longer-term relationship between the member and the scheme, and prevents pots becoming stranded when they reach a certain level. This means savers can keep track more easily and understand how prepared they are to retire. The report provides some additional details and decisions further to the discussions we have been involved in, and which we are carefully considering. Our core priorities for industry and government to explore together are keeping the member front and centre of process design – including ensuring sufficient analysis of core member protection measures and the allocation approach, along with implementation options. There is more to do – and we look forward to further discussions with industry and Government on this crucial issue.”
DWPs Small Pots Delivery Group report
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