Pension providers have handed the government a series of recommendations outlining how it should implement the planned reform of the small pot pension regime.
In July 2012 pensions minister Steve Webb announced plans to create a ‘pot-follows-member’ system for small pot pension transfers, meaning an employee’s pension savings are automatically transferred to a new scheme when they change employer.
Providers have written to the Department for Work and Pensions (DWP) proposing that a small pot should be defined as up to £10,000 and that a database of employees with small pots should be created.
Adrian Boulding (pictured), Legal & General pensions strategy director, said the database would help ease administration and communication between pension scheme providers.
‘When the member leaves their first employer, that employer’s pension scheme will tell the database it’s holding a small pension pot,’ he said. ‘When the employee arrives at their next workplace …the new scheme will check with the database, and it will tell them if their new employee has a small pot, which they then can arrange to transfer.’