Automatic Transfers: A Framework for Consolidating Pension Saving
11 February 2015
This publication sets out proposals for a framework for the automatic transfer of pension pots when people change jobs.
The implementation update paper Automatic Transfers: A Framework for Consolidating Pension Saving details the progress of the work that has been done to date on the policy of automatically transferring pension pots. The Pensions Act 2014 provides for a system where, broadly speaking, someone’s pension savings move with them when they move jobs.
The Department for Work and Pensions (DWP) has been working with a wide section of the pension industry to develop a model for implementing this system. This document sets out the work that has taken place to analyse the different implementation options and move towards a safe and efficient industry-led model.
The framework describes four key stages in the operation of automatically transferring a pension pot – pot flagging; pot matching; contacting the member; and pot transfer.
Pots will be eligible for transfer if they meet all of the following criteria:
- The first contributions were received on or after July 2012, to coincide with the beginning of automatic enrolment.
- The pot is worth £10,000 or less at the point of valuation.
- The pot is invested in a charge-capped default arrangement at the point of valuation.
The paper also sets the government’s intention for a phased implementation. There will be a limited number of schemes taking part so that the initial implementation is contained to a practical number of providers to test the infrastructure with and get feedback from.
The DWP do recognise that the industry needs a clear indication of who is going to be involved in the system in advance and will provide further information on who is included ahead of consultation on regulations later in the year.