The UK Government is looking into ways to help workers achieve better retirement outcomes, including those with several small pension pots scattered around. The average worker has around 11 jobs over the course of their career, which means some may end up with multiple retirement funds.
This creates a risk of people losing track of their savings as well as the admin costs and inefficiencies created for pension providers of maintaining them. The Department for Work and Pensions (DWP) has launched a call for evidence on small pension pots in Scotland, England and Wales, which will run until March 27, 2023.
It looks at the potential scope for the automatic consolidation of some pots, as well as recognising the impact of other actions, including enabling more member engagement, that could help. Two options which would automatically bring more pensions together include a default consolidator, where small pots would automatically be transferred into a scheme and ‘pot follows member’, where a pension pot would follow an employee when they move jobs and automatically move with them to their new employer’s scheme.
