Unemployment is at just 4.3%, the lowest level since 1975 – and official figures have shown a fall in the unemployment rate every month in 2017A new system to stop workers losing their small pension pots as they move from job to job has been outlined by the Minister for Pensions Steve Webb.
The update on the system of automatic pension transfers sets out how various small pension pots which a worker may have accumulated from different jobs will be able to be consolidated within their current employer’s pension scheme.
Whilst the scheme is due to start it autumn 2016, workers will initially be offered the option of consolidating their pension pots, before the automatic system is rolled out.
With over five million employees have already been enrolled into a workplace pension scheme, the number will increase further as small and micro employers are brought into automatic enrolment over the next three years
Minister for Pensions Steve Webb said:
“If we fail to take action there could be over 50 million dormant pension pots drifting away from savers by the middle of this century – that’s billions of pounds floating around that should be funding better retirements for people.”
“Auto enrolment is helping people to save for retirement, but we must help them to keep their pots together so they know clearly that their pension is growing for their future. With the average person now having 11 jobs in their career, this further reform is essential.”
The update comes on the back of nine months’ work with the pensions industry to create a safe and efficient model that works in the interest of workers saving for their future.
Under the new plans, automatic transfers will first apply to a limited number of larger schemes, which covers the vast majority of pension scheme members in the country.
The initial stage will introduce automatic matching of an individual’s mini ‘pension pots’. A person will be contacted to confirm if they want these pots to be moved to their new scheme – with an initial opt-in system introduced first ahead of a full opt-out model.
The aim is to have an automatic pot-matching system in place by autumn 2016.
