Pensions minister Steve Webb says the Government is focusing on how to consolidate “stranded” pension pots in an effort to improve people’s understanding of the value of their savings.
In February, Money Marketing revealed the Government had established a cross-departmental working group to look at improving transfers of small pension pots ahead of automatic enrolment in 2012.
The group includes officials for the Department for Work and Pensions, the Treasury, The Pensions Regulator and the FSA.
Speaking at the ABI biennial conference last week, Webb said: “We are very interested in stranded pots and I think there is a big debate to be had over transfers and consolidation. If you have lots of little pots, it is very difficult to know what you will get at retirement.
“But if people increasingly had one big pot and it was much more straightforward to get a feel for what that might be worth, then people would be less likely to get a nasty shock at retirement.
“It will take quite a bit of thinking to get us to that point but it is something we are doing and it might be part of the engagement story.”
Webb also revealed the DWP is preparing to start its automatic enrolment employee communications drive.
The campaign will have to be delivered on a tight budget after the DWP’s marketing spend was frozen as part of a tough comprehensive spending review settlement.
Webb said: “These reforms are about trying to get a whole new generation of people saving. If we get it right, it could be fantastic but if we get it wrong, then recovering people’s trust is going to be a nightmare.
“We hope that inertia will be part of the story but we have also got to communicate positively and that is something we are going to be working on over the coming months.”