‘Done is better than perfect’ – DWP urged to press on with measures on small pension pots

DWP has this morning published the first report of its ‘Small Pensions Pots Working Group’, designed to tackle the issue of the proliferation of small pension pots caused largely by automatic enrolment.

The report comes six years after the passing of the 2014 Pensions Act which included proposals for ‘pot follows member’ so that pension pots would move with a member when they changed job, proposals which were never implemented.

LCP Senior Consultant Tim Box, stressed the need to make progress, recognising that there is no perfect solution. He said:

"The Working Group has overall made a sensible range of proposals to be further investigated. Some such as “same provider/ scheme consolidation” should be relatively “quick wins” to start the ball rolling.

The solutions potentially having much greater impact such as member exchange, default consolidator and automatic pot follows member will require more analysis and planning.

We recognise DWP’s view that there may also be a place for member-led solutions but do strongly endorse the statement that automatic solutions will be necessary to complement these.

The key point now is for the DWP to press on and keep the momentum going so that the erosion and misplacing of small pots is reduced as quickly as possible. It is vital that at least one of the solutions is implemented as soon as possible – in this case “done is better than perfect”.”