Millions of Brits will find it easier to track their pension savings with the creation of a small pensions pot consolidator, in reforms unveiled by the pensions minister.
There are now 13 million of these small pots, holding £1,000 or less, with the number increasing by around one million a year.
This is a hassle for savers and can stop them getting a good return on their savings if they have to pay multiple flat rate charges. Overseeing all these small pots also costs the pensions industry around £225 million in unnecessary admin costs.
Under reforms introduced by this government as part of the Pension Schemes Bill, each individual’s small pots will be brought together into one pension scheme that is certified as delivering good value to savers. Individuals will retain the right to opt out.
This will cut costs for savers and make it easier to keep track of their pensions while boosting living standards and make working people better off. It will also cut red tape for businesses managing the schemes and unlock economic growth as part of the Plan for Change.
This announcement will reduce costs as well as hassle for savers, in time increasing the pension pot of an average earner by around £1,000 – boosting living standards and making working people better off. It will also cut red tape for businesses managing the schemes and unlock economic growth as part of the Plan for Change. Minister for Pensions Torsten Bell said:
“It’s great news that more people are saving for their retirement. But I want to make pension saving as simple and rewarding as possible.
There are now more small pension pots in the UK than pensioners – raising costs and hassle for workers trying to track their savings. It also costs the pensions industry hundreds of millions of pounds every year.
We will automatically bring together people’s small pots into one high performing pension, reducing costs as well as hassle for savers. In time this could boost the pension of an average earner by around £1,000 as part of our Plan for Change to put more money in people’s pockets.”
Transforming the pension landscape through the Pension Schemes Bill, set to be introduced in Parliament later this Spring, will deliver on the government’s manifesto commitment to boost investment and returns for savers and make working people better off.
The Bill will help over 15 million people, boost pension pots by £11,000 and spur on greater investment in productive assets. Zoe Alexander, Director of Policy and Advocacy at the Pensions and Lifetime Savings Association, said:
“The accumulation of small pots creates unnecessary cost and complexity for savers and schemes alike. The PLSA has worked extensively with industry and the DWP to propose solutions and supports the model being proposed by the Government.
We look forward to working on delivering the recommendations of the Small Pots Development Group and are pleased the Government is tackling this long-standing issue in the Pension Schemes Bill.”
One Response
In my opinion successive governments have bene badly advised by the likes of Scottish Widows Fund (SWF) now trading as lloyds Group with the CEO from Bank of Scotland ( and his mates ) – who were purchased by Halifax Bank – of “pensions”.
At SWF thier bg claim to fame was their involvement in JCB pension – whislt people trafficking computer consultants fromAUstralia on “Cheap Salaries?”. My experience with SWF wshtey entrapped me to move to St Albans on a Fife Salary and the SWF Internal Mortgage as arranged byt eh Shareholders and Directors form the Edinburgh Tories (incl Gordon Brown – who ransacked pension with his New Tax ). To prevent interference form SWF Tustees I moved to A J Bell – to find A J Bell was just as bad or worse – A J Bell sold on my pensionfund by Money Laundering through the nominated bank account after I alerted him to Fraud and deceit and how they achieved this through employees for which Was was subseuently persecuted. The common thread the BANK !