View more on these topics

Hargreaves warns dormant small pots cost retirees £1bn a year

File image of a pension savings potThe government is ignoring the problems of multiple pension pots that could drain £1bn a year from individuals’ retirement savings, Hargreaves Lansdown has warned.

The provider says that as a new pension pot is created every time a person moves job, the auto-enrolment pension system faces excess costs of hundreds of millions of pounds every year.

People will go through an average 11 jobs in their working lives, with a quarter of them working for more than 14 employers.

This means that every time they change jobs the pension from the last job is suspended and they have to join a new pension with their new employer.

The Department for Work and Pensions has projected this will mean 50 million dormant small pension pots by the middle of this century, costing hundreds of millions a year in unnecessary additional administration charges.

Hargreaves Lansdown head of policy Tom McPhail says: “If we forced employees to change their bank account every time they changed jobs there would be an outcry, yet this is what auto-enrolment does with their pensions.”

Hargreaves Lansdown believes the solution is to let people have their new employer’s pension contributions paid into their existing pension when they change jobs.

It says this change to the system would promote better engagement with pensions and also help to solve the problem of auto-enrolling the self-employed.

Recommended

Offshore amnesty could bring in 5bn

The Government’s amnesty for UK taxpayers with undisclosed offshore bank accounts could net the Treasury up to 5bn.

3

Malcolm McLean: Beware the gathering Sipp storm

The news that Sipp provider GPC Sipp is facing around 150 legal claims for compensation in relation to losses incurred from unregulated investments in the Harlequin property fund will be ringing alarm bells in many offices. The case is expected to enter the courts early next year and follows a number of other yet-to-be-concluded court […]

Careful-Research-Business-Finance-Paperwork-700.jpg

Global high yield outlook 2018

RLAM’s Head of Global High Yield, Azhar Hussain examines trends in the high yield and loans markets in a short video. Watch the video here Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. What nonsense. For dormant read default, or in other words an account where Trustees have a fiduciary oversight and duty. So better to move to HL on higher charges, because the bulk purchasing power is no longer in play, and individuals have to look after the assets themselves. Shame on them for the spin

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com