Savers should have a right to have their pension contributions paid into an existing scheme when they join a new employer to help the self-employed, Hargreaves Lansdown has said.

The provider has said that allowing new employees to use schemes they have previously been enrolled into could promote better engagement with pensions and help solve the problem of auto-enrolling the self-employed.

Government research from 2011 estimates that UK workers will go through an average 11 jobs in their working lives, with a quarter of people working for more than 14 employers.

With savers being forced to suspend the pension from their last job to join a new pension with a new employer, the DWP has projected that this will create 50 million dormant small pension pots by the middle of this century.

Hargreaves Lansdown believes that this could drain £1bn a year from individuals’ retirement savings through unnecessary administration charges.

The company also argues that giving individuals the right to keep a pension scheme they’re happy with would help them to engage more with their retirement savings. This is likely to lead to them being more comfortable making informed decisions about how and when to draw on their retirement savings.

It also believes that this would force pension providers to look after their customers better. At present, it says, an auto-enrolment pension provider can get away with poor service as members won’t leave for fear of losing their employer’s pension contributions.

By giving individuals the right to choose, it predicts that pension companies would know that poor customer service could be penalised by savers looking for a different scheme.

The pension provider would also be incentivised to look after savers and to reach out to them when they go self-employed in order to encourage them to continue saving.

Hargreaves Lansdown head of policy, Tom McPhail, said that the problem with the self-employed not saving into pensions could be somewhat alleviated by ensuring that newly self-employed workers stay enrolled in a former employer’s scheme.

“The longer someone has a pension arrangement, the more likely they are to engage with it,” he said.

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