Labour Shadow pensions minister Gregg McClymont has warned the Government’s proposed ‘pot follows member’ reforms are “deeply flawed” and will leave savers exposed to high costs and charges.
In July, pensions minister Steve Webb confirmed plans to introduce a new system where automatic enrolment pension pots would move with employees automatically when they change jobs to minimise the number of small, dormant accounts.
Yesterday, National Association of Pensions Funds chief executive Joanne Segars , Age UK director general Michelle Mitchell, Which? Chief executive Peter Vicary-Smith and TUC general secretary Brendan Barber wrote to Webb to voice their concerns about the proposals.
They said a saver could lose 25 per cent of the value of their fund if they are automatically transferred from schemes with low charges to schemes with high charges.
PricewaterhouseCoopers has since issued a statement arguing that an “aggregator model” – where peoples’ old pots would automatically transfer to a central scheme such as Nest – would be more attractive for employees, employers and providers than pot follows member.
McClymont (pictured) says: “The Government’s proposal is deeply flawed as a whole range of pensions industry opinion now agrees. Yet Steve Webb seems intent on carrying on regardless.
“His dismissive attitude is very worrying. The loser will be the pension saver who sees his money disappear in costs and charges.”