“I encourage the industry to continue in their efforts to understand how far they can progress consolidation solutions within the existing legislative framework.”
Complexities may hamper progress
Carol Knight, chief operating officer at Tisa, said the report was "crucial" to address the growing problem of small pots.
She said: “Tisa has long supported efforts to resolve the problem of small pension pots. We believe that, with full collaboration between the government and the industry, a robust and effective framework can be created to facilitate the consolidation and transfer of small pots."
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, reiterated the “enormous task facing the industry”.
She noted that ideally, levels of engagement between providers and members would see members “sufficiently engaged with their pensions and deal with the transfers themselves,” but recognised that there is a “need for some kind of automatic solution to reduce the number of small pots in existence and it is important the industry is bracing itself to deal with this”.
“However, there are also bigger issues at play here, and while automatic transfers will deal with the number of small pension pots in existence thought also needs to be given to how to solve the issue of small pots being created to begin with.”
“That’s why we support the idea of adapting auto-enrolment to allow individuals to choose which provider their pension contributions get paid to,” she added.
