The work and pensions select committee has warned the Government’s automatic transfer pension plans could harm members by moving them onto higher charging schemes.
In its report on improving governance and best practice in workplace pensions, published last week, MPs welcome plans to tackle small pots but say some could lose out.
Last week, the Government set out plans to launch an automatic transfer system for defined contribution schemes under £10,000. It means some workplace pension pots will follow members when they change jobs, stopping the build up of multiple small pots.
The report states: “While we agree with the Government that people should not be auto-enrolled into poor quality schemes, it remains the case that people may be transferred from a scheme with low charges and good governance into a scheme with high charges and poor governance.”
Evolve Financial Planning director Jason Witcombe says “The solution is to offer members a choice of transferring when they move jobs so they know what they are moving into.”