Labour has delivered an update on a crucial alteration to pensions policy that is set to come in soon. Conservative MP Richard Holden questioned the Government in a written question about their plans to bring in new legislation so “customers can access pension pot consolidation more quickly”. Pensions minister Torsten Bell provided a response outlining a package of changes that are on the way.
He said: “The Government is committed to the consolidation of small workplace pension pots, when in the best interests of savers.” He spoke about the Pension Schemes Bill 2025, tabled before Parliament in June, which includes provisions “to address the growing issue of deferred small pots”.
A deferred pension occurs when a person chooses to delay claiming their pension until later in life, allowing their investment pot additional time to expand. Mr Bell explained that people frequently end up deferring their pension as people accumulate multiple pension pots through changing their jobs over their working life.
Workplace pension pots
Discussing the measures to be introduced under the Pension Schemes Bill to tackle this matter, Mr Bell said: “This will ensure workplace pension pots, initially worth £1,000 or less are automatically consolidated, unless members choose to opt-out.
“This will address the 13 million stock of deferred small pots, and any future small pots that are created.” The minister continued by explaining that people can take steps themselves to consolidate their pensions if they want.
He said: “Currently, individuals can transfer and consolidate their pension pots themselves through a member-initiated transfer. This will also soon be aided by the introduction of pensions dashboards.
“Once launched, pensions dashboards will allow people to find and view their pensions, including state pension, securely and in one place online. This will help people to reconnect with each of their pension pots and better plan for retirement.”
One danger of having multiple pension pots is that you might forget about some of your retirement funds. Research from the Pensions Policy Institute from last year suggested a typical lost pension pot is valued at £9,470, climbing to £13,620 for people aged 55 to 75.
The Government website offers has a tool you can use to to find the contact information for the provider of a pension you have lost.
