‘Pot follows member’ put on the backburner again
18 April 2018
In October 2017 the Pensions Minister, Guy Opperman suggested that the Department for Work and Pensions (DWP) was looking at ‘Pot follows member’ as part of its review of automatic enrolment.
In October 2015, the then Pensions Minister, Ros Altmann, announced that the government had scrapped plans to roll out an automatic transfer system for small pension pots. If it had come to fruition it would have seen pension pots of less than £10,000 automatically moved to an employee’s new pension scheme when they changed jobs.
A parliamentary written question was recently asked by Royston Smith, MP (Southampton, Itchen), about what assessment has been made of the potential merits of a system of automatic transfers for individuals who have multiple jobs during their working life.
Guy Opperman responded by saying that the government’s priority for private pension savers in 2018 remains the successful roll-out of automatic enrolment and that industry shares this priority. With 94% of eligible jobholders automatically enrolled in an occupational defined contribution scheme enrolled in a Master Trust, the Minister said that scheme managers and trustees are focused on preparing for compliance with the authorisation and supervision regime introduced by the Pension Schemes Act 2017.
Opperman said:
"These reforms increase the number of people saving into workplace pensions and ensure confidence in the system. Government, providers, employers and members should focus on these changes. It is therefore not the right time to implement automatic transfers.”
It was pointed out in the response to Royston Smith, that all those with a defined contribution pension pot have a statutory right to transfer to another pension scheme of their choice and can use the Pension Tracing Service to identify pension pots they have accumulated with former employers. And that members could also benefit from the introduction of the pensions dashboard, which should make it easier to see all their pots in one place when they choose to do so.
The Pensions Minister finished by saying that the DWP is currently conducting a feasibility study and aim to publish their findings later in spring 2018.