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DWP to review costs of pension auto-transfer plans


The Government is planning to review two alternative automatic pension transfer systems as it looks to gauge the potential impact and cost of introducing “pot follows member” reforms.

In April, the Department for Work and Pensions set out plans to introduce an automatic transfer system for pension pots worth less than £10,000.

Policymakers are considering two reform options.

The first, a “pot matching” system, would require schemes to upload information relating to members’ pension pots onto a new central IT system which would facilitate auto-transfers.

Under the second approach, a member leaving an employer would be given information relating to their pot in the former employer’s pension scheme, which they would pass onto their new employer on starting work.

Centre for Retirement Reform development director Helen Coulson, who wrote a white paper for the DWP last year setting out how auto-transfers could be facilitated, says: “I have it on good authority from DWP that they will review both the database and ‘pension P45’ in September. 

“DWP wants an idea of the consumer, employer and provider impacts and costs for implementation and ongoing running.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “There are potential issues with automatic transfers, particularly if members are automatically transferred from a good scheme to a bad scheme.”

A DWP spokesman says: “We are continuing to work with the industry and our partners across Government to develop detailed options for the automatic transfer process.”


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  1. You can bet your bottom dollar that the DWP will spend another 3 or 4 million of hard earned tax payers money on this review and get absolutely nowhere.

    I’ve always thought this pot follows the member discussion was pointless as we already have a perfectly good pot follows member system its called a “personal pension”

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