DWP to act on short service refunds and small pots
The Minister for Pensions, Steve Webb, has promised to protect the pension pots of people who move jobs often by abolishing short service refunds for defined contribution (DC) occupational schemes. These refunds allow individuals to get their pension contributions back – leaving them without a pension.
The Department for Work and Pensions (DWP) plans to abolish short service refunds for DC occupational schemes in the next Pensions Bill.
Steve Webb said: “I want to ensure that as people move jobs, their money stays in pensions. Taking the money out goes against our overall goal of getting millions more people saving.”
The Minister is also committed to taking action to prevent people losing small pension pots. A DWP paper looks to address the complexities in the current system that make it difficult for people to transfer their pension pots throughout their careers into one big pension.
Steve Webb
A highly mobile jobs market and the introduction of auto-enrolment will lead to around 4.7m additional small pension pots in our pensions system by 2050.
Options for consultation (which closes on 23 March) range from small changes to encourage transfers to an automatic transfer system, where pension pots could either be consolidated in one or more “aggregator” schemes, or for pensions to move with people from job to job.
The full paper Meeting future workplace pensions challenges: improving transfers and dealing with small pots and impact assessment on abolishing short service refunds and a DWP consultation on the 2012/2013 review and revision of earning thresholds for auto-enrolment is here:
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