DWP rejects call for auto-enrolment change

The Department for Work and Pensions (DWP) has rejected a suggestion to allow individuals to retain their previous pension provider after they change jobs.

Hargreaves and Lansdown has been lobbying the government to introduce the new system, but the DWP announced to the Work and Pensions select committee that there were no plans to implement it.

The proposal aimed to give investors with a pre-existing pension the ability to remain with their previous provider once they join a new employer, instead of joining their new employer’s scheme.

In order to avoid disrupting the current default structure, Hargreaves Lansdown’s proposal would not change the current auto-enrolment system unless the individual requests that their contributions are paid into their pre-existing pension.

However, the DWP has revealed that the government was “sceptical” that the number of individuals who would participate in choosing their own scheme would be enough to create effective competition.

The DWP were also concerned that the adoption of the new system would create a “potentially significant new burden on employers” as they may have to engage with multiple workplace pension schemes.

Hargreaves Lansdown head of policy, Tom McPhail, admitted the DWP may not want to rock the boat at present: “The DWP has spent the last 10 years getting its auto-enrolment ducks in a row and the whole system is working well, so it’s understandable there are individuals in the department who are reluctant to fix something they don’t see as broken.”

Despite this, McPhail ohpes that the government will come round to their way of thinking in the future.

“There is widespread support for further change, from consumers, the industry, payroll and technology companies as well as many working in government. We’re not expecting a quick win here and we’re happy to keep pushing for reform which will put individuals in control of their own retirement,” he added.

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