People’s Partnership1, which provides The People’s Pension to more than six million people across the UK, has today given its backing to the Government’s proposal to create consolidators2 to deal with the growing small pots problem.
In a Government consultation, the Department of Work and Pensions (DWP)-proposed a framework would enable a small number of authorised schemes to act as regulated consolidators for deferred pots under £1,000. In its response, The People’s Partnership agreed that this is the best solution to tackling a problem which has seen millions of small, dormant pension pots created since the introduction of automatic enrolment in 2012.
The provider of the UK’s largest master trust, believes that the consolidator option will help build the scale required to enable pension schemes to invest in less liquid assets, as outlined in the Chancellor of the Exchequer’s Mansion House speech in July. It also supports the proposal to use the value for money metrics, which the Government wants to introduce to the defined contributions pension market.
However, People’s Partnership has warned that there is a vast amount of work to do over the next six months to operationalise the framework.
Commenting, Phil Brown, director of policy at People’s Partnership, said:
“The growing number of small, deferred pension pots has become an increasing concern for the industry, and we are pleased that the DWP has offered a solution which works in the interests of savers.
“Our main reason for support of this proposed solution is that it will hold consolidator schemes to a higher regulatory standard, which will only improve outcomes for savers.
“From an operational perspective, the core processes needed to make consolidators work are very similar to the processes needed to make pot follows member work. There is also an opportunity to learn from the dashboards project. While there’s a lot of detail to work through, the consolidators proposal looks achievable and no harder than anything else that was on the table. With the policy direction now set, it’s now up to the industry to make this work.”
Notes for editors:
1. People’s Partnership provides The People’s Pension, the largest, independent master trust in the UK, serving more than six million pension savers across the UK and manages more than £21bn in assets. As a business without shareholders, it reinvests its profits with the aim to help customers and achieve better financial outcomes for everyone.
2. The consultation, Ending the proliferation of deferred small pots opened in July and can be found here: https://www.gov.uk/government/consultations/ending-the-proliferation-of-deferred-small-pension-pots/ending-the-proliferation-of-deferred-small-pots