Standard Life comments on the DWP's consultation on small pots

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• Commenting on the consultation into the issue of small pots, Gail Izat, Workplace Managing Director at Standard Life said:

“The average person works more than 10 jobs in their lifetime and when you combine this with auto-enrolment, there has been an exponential growth in the number of deferred small pots. The current situation is increasing both the risks of lost pots and amplifies issues with engagement.

“The industry has been debating a number of possible solutions and we would like to see this consultation lead to the introduction of a ‘pot follows member’ approach whereby pensions under a certain size automatically transfer when people change jobs.

“If implemented efficiently this will have the advantages of not requiring any action from the member. It is also an easy concept for consumers to understand compared to other more complex approaches. In a charge cap environment concerns about the value for money offered by receiving schemes are greatly lessened.

"Alternatives such as a Default Small Pot Consolidation option, in which any small deferred pots would be transferred to a pre-determined consolidation destination look less practical as this runs the risk of distorting competition, and gives consolidators little incentive to invest in their proposition.”