The Government has established a cross-departmental working group to improve transfers of small pension pots ahead of automatic enrolment in 2012.
The Department for Work and Pensions says the group includes officials from the DWP, the Treasury, The Pensions Regulator and the FSA.
Legal & General pensions strategy director Adrian Boulding was part of the three-man auto-enrolment review team that recommended the Government and regulators should address the issue of transferring small pension pots “as a matter of urgency”.
Boulding says: “This move shows the Government has a real determination to analyse the problem and do whatever needs to be done to find a solution.”
Institute for Fiscal Studies director Paul Johnson, who chaired the auto-enrolment review team, says the system needs to change. He says: “People have 10 jobs on average and it is incredibly hard to transfer your pot from one workplace to the next so you are likely to end up with 10 pots and that is expensive and inconvenient.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “The cost to transfer £5,000 is the same as transferring £500,000, so the problem is that at a certain point it is uneconomical for advisers to do the work, so it has either got to be subsidised or someone is going to have to pick up the cost of advice.”
The Government is seeking industry views on improving transfers in its calls for evidence on early access.