Workers who change jobs risk losing up to a quarter of their pension under Government plans to let employees carry retirement funds with them, consumer groups, charities and pension funds warn in a letter to The Daily Telegraph.
Under proposals by the Department for Work and Pensions (DWP), people who move jobs will be able to transfer pension pots from former employers into the retirement scheme at their new place of work. The so-called ‘pot follows member’ scheme is designed to prevent millions of small retirement pots lying dormant and forgotten after people change jobs.
However, leading charities and consumer groups representing millions of savers today urge the DWP to “think again” about the scheme, which they say is “impractical”, “unacceptably risky” and could be “highly expensive”.
Pitmans’ Pensions Partner David Hosford comments:
“The pot follows member proposals have come under heavy attack, understandably so. The counter proposal of a central aggregator arrangement to which small pots are automatically transferred on change of employment makes far more practical sense,could significantly reduce the work involved in making the transfer and benefit both members and employers. The creation of a new transfer infrastructure should be as simple as possible to minimise errors and expense, and the government proposal seems to have lost sight of the practicalities.”