One of the perceived problems with pensions Auto-Enrolment was the number of small pension “pots” that would be created given that the average UK worker changes employer many times throughout their career. In the early stages of the Auto-Enrolment project this was deemed to be a major challenge, and therefore the previous Minister set in motion the project unofficially dubbed by him as “operation big fat pension pot”.
The idea was simple; as people moved jobs their accumulated auto-enrolment funds would be transferred automatically to their current pension plan. This became known as “pot follows member”. It made some sense, and the big wheels of the DWP and the industry set about making this a reality.
Until last year. With the surprise announcement of Pension Freedoms in the spring 2014 Budget speech, suddenly the consumer need and drivers for this auto-transfer process seemed rather weak. Yet there seemed to be a refusal to acknowledge this change of direction, and the project continued to grind on.
However, we are pleased to report that the new Minister for Pensions has concluded that “the time is not right” for these proposals. It is unclear as to whether this is a genuine retreat from the idea altogether, or merely a pause in proceedings. This is however good news for employers, as the Pot Follows Member project was almost certain to add yet more employer pension duties, so we are sure our followers will welcome this move.
Other projects have also been shelved, including the Defined Ambition pension scheme projects which were much spoken about earlier this decade.
So, for once, a slice of good news for employers regarding pensions.
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