Pensions minister Steve Webb has criticised the “vested interests” opposing the Government’s plans to introduce an automatic “pot follows member” transfer system for small pension pots.
In July 2012, the DWP confirmed plans to introduce a new system whereby small automatic enrolment pension pots will move with employees automatically when they change jobs.
The Government has yet to decide on a size limit for small pot auto-transfers.
Addressing the work and pensions select committee last week, Webb said the proposals had met fierce opposition from providers who are “terrified” about losing profitable legacy business.
He said: “This is the one issue where I most encountered the vested interests of the pensions industry. I was astonished by the hornet’s nest we managed to stir up. You have all these people with lots of legacy business and they are terrified that all their profits are going to disappear.
“If you are an old firm not writing a lot of new business but you have all this legacy money sitting there, often with very high charges, you are terrified that I am going to stir up your cosy little world and start moving profitable money out of your business.”