Speaking at briefing hosted by the Pensions and Lifetime Savings association on November 24, Adair Turner, who as chair of the Pensions Commission from 2003-06 set in motion the wheels of auto-enrolment, said: “Large costs are not because the industry is getting fat in terms of profit at the expense of pensioners, it’s because there’s too much waste in the system. There’s too much complexity, too many pots.”
Lord Turner, a past chairman of the Financial Services Authority, told delegates that he personally has about six different pension pots, meaning that six times a year he receives a “voluminous” assortment of documents about his respective pensions, each with their own associated administrative costs.
He said: “I think the precedent should clearly be that as many people as possible get to retirement age with all their money in the one pot. We have to establish the assumption that this is a sensible thing to do and remove all barriers to achieving that.”
He argued the technology existed to make such a shift possible, and that the industry should be moving towards a system in which employees have no more than two pots, one linked to the company in which they currently work and a separate underlying aggregated pot. He said that when employees move on to pastures new, the accrued company pension should then be swapped into the main fund.
He added: “What we should be debating is not whether the vision [of consolidation] is correct, but how we should get there.”
The former pensions minister Ros Altmann confirmed in October 2015 that the government’s “pot follows member” policy – which would have seen individual pension pots transferred with an employee as they move jobs – had been put on hold, due to the volume of new pensions regulation already imposed upon the industry.
Instead, the government has corralled 11 pensions providers to work toward an information system, known as a “Pensions Dashboard”, which will allow savers to see all their pots in one place. This is planned for launch in March 2017.
Writing for Financial News in October 2015, another former UK pensions minister, Steve Webb, who championed the “pot follows member” idea when in office between 2010 and 2015, argued that multiple DC savings pots were “one of the chief problems” that threatened the success of auto-enrolment.