On the go: The Department for Work and Pensions has launched a working group in collaboration with industry to propose solutions to the challenges posed by small pots.
At a virtual event held by the DWP, Guy Opperman, minister for pensions and financial inclusion, announced the new working group will report later in the autumn with an initial assessment, recommendations and an indicative road map of actions for the industry, delivery partners and the government.
The new working group will complement the work on the pensions dashboards to identify the priority option or combination of options to help tackle the growth of deferred, small pension pots — involving experts from within the pensions industry, fintech and those representing member interests and employers, the DWP stated.
Recent research from the Pensions Policy Institute estimated that by 2035 there could be up to 37m deferred pots in master trusts, dwarfing the number of active pots and creating instability in the market.
There are already 10m small deferred pots, potentially rising to 27m in 15 years. The PPI report estimates that the cost to master trusts of managing active and deferred pots will reach £1bn by 2035, while member charges could rise to £1.2bn.
Mr Opperman said: “Automatic enrolment has transformed the way people save for retirement, meaning millions more can look forward to a more secure future.
“With the launch of the cross-sector working group and our ongoing efforts to make pensions dashboards a reality, we are focused on ensuring that consumers can stay on top of their pension savings, make more informed choices about their financial futures, and have real returns from their savings.”
