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Govt axes pot follows member reforms

Ros Altmann

Pensions minister Ros Altmann has confirmed the Government has scrapped plans to roll out an automatic transfer system for small pension pots.

Money Marketing revealed last month the Government was considering axing the controversial plans, which would have seen pension pots of less than £10,000 automatically moved to employees’ new scheme when they change jobs.

In a written ministerial statement, published today, Altmann says the changes to the state pension and pension freedoms meant the market “needs more time and space to adjust”.

The statement says: “All these reforms will increase the number of people saving into workplace pensions, introduce new freedoms allowing savers to access their cash, and implement a new state pension that will be far easier to understand in the future.

“However, we are conscious of the need to ensure Government, providers, employers and members are able to focus on these changes to ensure their success.

“That is why we have decided that the time is not right to implement defined ambition, collective benefits and automatic transfers. The time is not right to ask the pensions industry to absorb the new swathe of regulation that would be needed to make such further reforms work effectively. The market needs time and space to adjust to the other reforms underway and these areas will be revisited once there has been an opportunity for that to happen.”

Former pensions minister Steve Webb says while delaying the pot follows member and defined ambition reforms is understandable, the underlying challenges remain.

He says: “You have all these people to go through auto-enrolment and you have a new state pension and you have to work to make sure the broader freedoms land successfully.

“Inevitably those are the things you want to continue with, and you need the industry to focus on those things too.

“The reservation I have is that you have to put down some foundations for the long-term at some point.

“The proliferation of small pots and all the risks of provision going on to individuals aren’t going away. At some point we will have to address both of those.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Oh do come on! Isn’t it obvious. It has been hoped that the majority of AE will go to NEST – the Govt. sponsored scheme. TATA owns NEST. If it isn’t a success will TATA withdraw? Bear in mind they were the only one prepared to take this on. So who will take it over if TATA withdraws? Will the costs (which are supposed to be capped) then go up? This whole thing is in the interests of NEST and the other really large and low cost AE providers. Just look at the TPR website. NEST is listed first followed by The People’s Pension & Now Pensions.

    So journalists – wake up please! Aren’t there any investigative journalists left or do you all now just publish what you are fed?

    As far as the client is concerned it is a dogs breakfast. No one stays in a job for life any longer. SO they will just accumulate small pots. Eventually they may be able to transfer and consolidate – at what cost?

    Isn’t this just another of the copious reasons to avoid AE like the plague. Pot out as soon as you can.

  2. Christopher Petrie 15th October 2015 at 3:58 pm

    Why would an Employee opt out of a pension where the tax relief plus Employer contribution is greater than their own payment?

    AE is the best thing ever to happen to lower paid working people…a real chance to build up some money, often for the first time in their lives.

  3. Excuse me for bringing up the frozen pension policy but pension indexation should follow the pensioner and not be withdrawn dependent on the country of residence in retirement as it is now. Webb, of course, was the big supporter of scrapping this policy before becoming Pensions Minister and Ros Altmann is left with sorting out the mess he left.
    Taking what you have accrued when it is appropriate seems to be the best policy because of Government hands in your pocket.

  4. Thank you Harry Katz for the information in your comment. Why is it when Gov stick their nose into business, it always gets chopped off. I hope for everyone’s sake (least of all Tata)that AE is as successful as Gov say it is.
    On to George Morley and his reasoning that annual index related increases in state pension should follow the pensioner regardless of address.
    Why not?? If a private pension company were involved here it would surely happen, and if it didn’t, that company would end up before the courts. But Gov wrote the law, more specifically Steve Webb, and if they want to maintain a punishing, cruel, vindictive, discriminative piece of legislation (despite all recipient OAPs qualifying equally) then who’s to they’re wrong.
    I will, I’ll say they’re completely wrong – and have been for years. Anyone agree??

    • Andy Robertson-Fox 16th October 2015 at 10:11 am

      Yes, Jeff Chıpps I agree…it has been pointed out to successive governments that there is no rhyme or reason for the frozen pension dıscrimination and, as Webb admırably proved at the Scrutiny Committee stage of Sectıon 20 of the 2014 Pension Bill (now enacted) they can offer no plausable excuse for it.

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