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CONSULTATION WILL BE PUBLISHED TO RESOLVE ISSUE OF PENSION TRANSERS, SMALL POTS AND SHORT SERVICE REFUNDS 7 December 2011 The Pensions Minister, Steve Webb has outlined two “big bang” solutions to the issue of small pot consolidation. Professional Pensions reports: He said the issue could be solved by linking the pot to the worker, meaning it would move from job to job with that person or stranded pots would be defaulted out into a third party scheme designed for that purpose. The pensions minister said the Department of Work and Pensions will shortly be publishing a consultation into the issue of transfers, small pots and short service refunds. Webb said: "There are a number of frontrunners. We could do very marginal incremental ‘tweaky' sorts of things to make transfers a bit easier, but there are two big bang ideas. "One is to say, should the pot follow the person? So should there be some sort of default where you change job and like some sort of magnet your money goes with you unless you actively say that it shouldn't." Webb said that while this was an obvious solution there were potential problems and the move could leave the government open to legal claims. "What if the firm you're leaving has a pretty good pension scheme and the place you're going to has not a very good pension scheme? Above the minimum standard, but not as good. "And we, the government, default you from a good scheme to a not-so-good scheme, are you going to come back and sue me in ten years' time - which I don't fancy very much," he added. Webb said the second option would see small pots default to a third part aggregate scheme, a number of them, or super trusts. He said he was "very open" to options for the third party aggregator, arguing it could be a single home for lost pots like NEST or multiple large schemes where you pick one as your default. The Liberal Democrat MP told delegates at the National Association of Pension Funds trustee conference that this would be a "genuine consultation". "It is one of these consultations where we haven't made up our mind yet," he joked. But he reiterated his stance that short-service refunds should not play a role in the pensions landscape and had strong words discouraging trustees from enhanced transfer exercises. The minister also said he would fight the imposition of Solvency II requirements on UK pension schemes by building a coalition of European allies opposed to the move. He commented: "We will be working with other European countries to build a coalition to stop the imposition of Solvency II on British pension funds."
CONSULTATION ON IMPROVING TRANSFERS AND DEALING WITH SMALL PENSION POTS
21 December 2011
CIPP Policy News Journal
09/10/2012, Page 176 of 234
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