The Minister for Pensions Steve Webb’s promise to keep transfer fees under pot follows member reforms “trivially cheap” has been called into question by B&CE.

The Department for Work and Pensions (DWP) has announced that it will create an automatic transfer system for small pots of less than £10,000 allowing workers to take their pensions with them when changing employer, thus encouraging the consolidation of a “big fat pot”. Official figures show that 50 million dormant pension pots will have been created by 2050 as a result of the auto-enrolment process.

However B&CE director of customer solutions Jamie Fiveash said: “Costs of individual transfers would need to get down to at least £1 per transfer for it to not have a significant effect on provider costs and hence member charges. Having modelled what is involved with pot follows member extensively with other providers, we can’t see how this level of cost is achievable.

“We would urge the DWP to analyse the full impact before setting out the details of its policy. Where decisions are made without appreciating the knock-on effect, the implementation of the Poll Tax in the 80’s being a good example, those decisions will have far-reaching consequences.”

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