Auto-enrolment pension savers could lose £300 a year by changing jobs
♦ Pensions auto-enrolment could be costing people up to £300 a year because of frequent job moves, a report warns.
The scheme, which means employers are obliged to put most staff into a pension unless they opt out, was launched in 2012. But Hargreaves Lansdown, the stockbroker, has warned that savers could end up paying as much as £300 a year in unnecessary duplicate charges thanks to a growing number of dormant pots.
The average worker will have 11 different employers over the course of their lifetime, with a quarter having more than 14, says the report, and auto-enrolment means they will be given a new pension pot with each new job. Each one would come with administration charges of up to £80 a year, with the average around £30.
The broker’s report calls on the Government to give workers the right to request that their new employer pays into their existing pension.
Tom Mcphail, of Hargreaves Lansdown, said: “If you have a pension and you are happy with it, you shouldn’t be forced to take on a new one just to benefit from your new employer’s pension contributions.”
Currently it is up to employers as to whether they will make pension contributions into a different scheme, but Mr Mcphail said many refused as “they don’t want the hassle”.
The Department for Work and Pensions said: “Automatic enrolment is a success and has already reversed the long-term decline in workplace pension saving. As a result, more than 9.7million people have been enrolled into a workplace pension by almost 1.3million employers.”
Employers currently make contributions of two per cent, but this will rise to three per cent in April. Employee contributions are set at three per cent and will rise to five per cent.