To address concerns that regular job-changes among automatically enrolled members would lead to an increasing number of "stranded pots", the Government introduced legislation in the Pensions Act 2014 to provide a statutory framework for the automatic transfer of pension pots so that they follow members as they move from one employment to the next. The DWP has published a policy paper setting out, in more detail, its proposals for the new system.
The DWP notes in its introduction to the paper that the automatic transfer system to the current employer's pension scheme will be facilitated by the scheme (not the employer). It will apply to eligible pots in the money purchase default arrangement of a pension scheme where the pot is below a threshold value. Members will also be provided with information about the transfer and will be able to opt-out of the automatic transfer mechanism where they wish to keep their pot in their existing scheme. The DWP intends to introduce the new system from October 2016 but it will be implemented on a phased basis to enable testing before the system is fully rolled out.
The DWP's preferred model for the system is what it calls a "federated model". This will involve a network of registers (as opposed to one central register) which store and match information about small pension pots. The DWP notes that its work is continuing and it expects to provide a further update later in 2015.
The DWP's policy paper can be viewed here.