DWP steps up efforts to tackle small pension pots with new delivery group

The Department for Work and Pensions (DWP) has launched a Small Pots Delivery Group to help design its new approach to tackling deferred small pension pots, which is expected to benefit the average saver by £700 at retirement.

The group, which includes various industry experts, will provide recommendations on how best to implement the proposed multiple default consolidator approach, which was set out in the government’s consultation response in November 2023.

The response, published as part of the Autumn Statement, confirmed that the government would be pushing forward with its plans to introduce the multiple default consolidator model for DC schemes, to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000.

The plans are expected to help address growing concerns in the industry, particularly in light of the rapid growth in the number of deferred small pots, with DWP estimates suggesting that, without intervention this could result in annual administrative costs of up to £225m by 2030.

Commenting on the launch, Pensions Minister, Paul Maynard, said: “Deferred small pots are costly, inefficient, and hard to keep track of.

“This group will help in crafting a cost-effective and efficient system, ensuring better financial security and greater value for money for millions of savers.”

Chaired by the DWP, the delivery group has representation from: the Financial Conduct Authority, The Pensions Regulator, the Pension and Lifetime Savings Association, Association of British Insurers, the Pensions Administration Standards Association, the Chartered Institute of Payroll Professionals, the Association of Pensions Lawyers, Which, the Federation of Small Businesses, the Confederation of British Industry, the Pensions Policy Institute and the industry led Small Pots Coordination Group.

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