The Government is facing calls to abandon plans to automatically transfer pension pots when people move jobs in favour of a virtual platform where people can view their savings.
The Department for Work and Pensions is considering a variety of proposals as part of pensions minister Steve Webb’s “Operation Big Fat Pot”.
These include improving the pension transfer system, automatically shifting small pots into a big aggregator scheme such as Nest, or creating a new system where people’s pensions move with them from job to job.
Standard Life head of pensions policy John Lawson says: “Automatic transfers, even of small pots, could end up being another financial services debacle. If you automatically transfer someone from a low-risk fund to a high-risk fund or away from a fund with guarantees, then it is possible in the future we as an industry will face litigation because that transfer has cost the customer money.
“We need to look at creating a system which does this in the virtual world, so on one page people can see what all their benefits are and how much their pension is worth. Ultimately, you could make it a transaction platform as well.”
Radcliffe & Newlands chartered financial planner Mel Kenny says: “This sounds like a great idea in theory but the problem is providers will continue to confuse consumers by bombarding them with information. They need to make that information simpler if they want to engage people.”