Gail Izat, Managing Director for Workplace and Retail Intermediary at Standard Life, part of Phoenix Group said: “The number of small pots in the system is growing at a rate of knots and ultimately heightens the risk that people will lose track of their hard-earned savings. The introduction of consolidators that can administer these pots effectively and invest them dynamically will be a step forward and when combined with pension dashboards will empower people to take control of their savings. We look forward to working with government on the creation of this new system and to working through the role of consolidators and what it entails.”
Tim Box, Principal at LCP commented: “It’s disappointing that today’s report says that we are still at least five years away from small pots being consolidated especially when it has been under discussion for more than a decade. It is also worth noting that the effect will be fairly limited when consolidation does eventually start to take place. Until then, there are still many more key details to be worked out. The most significant will be around keeping the £1,000 savings threshold under review with the intention of increasing it over time.”
Kate Smith, Head of Pensions at Aegon: “The Pension Schemes Bill will include a package of reforms, including a new duty on schemes to enable the automated consolidation of small, deferred pension pots, valued at £1,000 or less, into authorised default consolidators. The Small Pots Delivery Report(1), published today, sets out recommendations on how best to implement the model. It’s clear that there’s still a lot of work to be done to determine the authorisation and supervisory framework, design, delivery and implementation of the small pots regime. The government intends to build on the master trust authorisation regime to enable master trusts to apply to become default consolidators. It's expected the FCA will develop a regulatory framework for GPP providers. One key element is a feasibility review of the Small Pots Data Platform digital infrastructure, which will be led by the PLSA. Previously described as the ‘clearing house’, this is a critical component of the proposed small pots regime, as it will be responsible for data matching and verification, and identifying or allocating a default consolidator. The new duty on schemes to transfer small, deferred pots to authorised consolidators is due to be effective from 2030 and it’s likely this will then be phased in over a few years. We believe this is a reasonable timeframe given the other reforms the Government intends to deliver including pension dashboards, the value for money framework, and its pension scale objectives. These will lead to scheme-level consolidation as well as having an impact on future authorised default consolidators, so need to be delivered first.”
(1) DWPs Small Pots Delivery Group report
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