The Government has come under fire for moving too quickly on its pot follows member reforms as industry bodies argue the current proposals could leave employees worse off.
Under the reforms, pension pots of £10,000 or less would move with a worker when they change jobs, in order to stop dormant pensions being left with old employers.
But in a jointly signed a letter in the Financial Times today, the National Association of Pension Funds, the Trades Union Congress, Which?, Age UK and the Engineering Employers’ Federation have called on the Government to change its plans.
The letter raises concerns the current proposals could see savers’ pension pots moving from well-run schemes to ones with higher charges and less robust governance.
It says: “We are very concerned that the government is moving far too quickly to prescribe a system for automatically transferring pension pots every time a person moves jobs without having fully worked out how to safeguard savers’ interests.
“Savings could be switched out of investment assets into cash and then reinvested from cash into investment assets every time the member changes jobs and joins a new pension scheme, thus exposing savers to repeated transaction costs.”
The organisations want the Government to accept amendments to the Pensions Bill, tabled in the House of Lords, which would see alternative plans considered such as the aggregator approach, where dormant pension pots are transferred to a third party scheme.
But pensions minister Steve Webb told the newspaper: “Now is the time for action, and pot follows member is what the public say they want.
“The only amendments available to vote on Wednesday would kick this policy into the long grass. We need to get on with this, and enable people to build-up worthwhile pots in a single place.”