Transfer of Small Pension PotsWednesday, July 18, 2012
On 17 July 2012, the Government issued its response to consultation regarding the proliferation of small pension pots.
It is anticipated that automatic enrolment and a highly mobile jobs market will lead to a significant increase in the number of small dormant pension pots in our future pension system. The burden of these small pots is compounded by the fact that systemic barriers, like cost and complexity, prevent people from moving and consolidating their pensions into the one place. In its consultation response the Government confirmed that it would like to achieve change as soon as possible and that its preferred approach is for pension pots that are created in automatic enrolment schemes to be automatically transferred to the new employer’s pension scheme each time an individual changes job, unless the individual opts out of the transfer process. Although short-service refunds of contributions are to be abolished, the Government will also explore the idea of allowing ‘micro-pot’ refunds.