Pot follows member will begin on a voluntary basis
14 January 2015
Pensions minister confirms that the transfer of pension pots will happen on an opt in rather than an opt out basis and that eventually money will follow member by default.
Professional Pensions has provided a summary of evidence delivered to the Work and Pensions Select Committee on 12 January.
Pensions minister Steve Webb revealed the initiative would start with the 20 largest providers who cover about 90% of the market. This comes after the minister confirmed job moves would not automatically trigger pot follows member transfers last year.
He explained the solution might work in a similar way to transfers in the ISA market but that DWP would publish details of its plans next month.
"[Providers] will get the infrastructure up and running. We will then get it started. And what we plan is to do it on an opt-in rather than an opt-out basis. Eventually money will follow you by default," he said.
The initial opt-in approach would help with the problem of pension scams and matching pots, which were "slowing things down" he said. A solution is expected to be in place within 18 months.
Webb said: "I think the whole area of pensions transfers has been ripe for reform for years - they've been slow, they've been expensive.
"If we're going to do this thing we've got to do it in bulk, we've got to do it efficiently and we've got to streamline it. There are good examples on ISA transfers that work really well and really cheaply.
"It ought not to be rocket science. All we're doing is taking a pot with somebody's name on it and matching it to the same person somewhere else. But we've got to get it right and that's why we think this incremental approach is best."