Pension fears

THE GOVERNMENT outlined plans yesterday to make it easier for people to take their work pension with them when changing jobs.

But fears were raised that the move could create a ‘pensions lottery’, with people unwittingly seeing their pots automatically transferred to better or worse schemes.

The Government believes its ‘ pot follows member’ plans could halve the number of dormant pension pots that would have otherwise been created by 2050 by making it easier for people to keep their pots with them.

However, the National Association of Pension Funds (NAPF) warned that if someone with a pension pot of around £10,000 and an annual management charge of 0.5% was moved into a pension with a charge of 0.9% a year, they could lose around £1,500 or 10% of their pot after 25 years.

It suggested that rather than transferring someone’s pension pots when they move jobs, a better solution would have been to allow people to move their pensions into centralised lowcost ‘aggregator’systems.

The G ove r n m e n t consulted on various approaches and it believes the ‘pot follows member’ system will provide the best value in terms of administrative costs for pension providers, which has the potential to benefit savers in the form of lower charges.

However, Age UK, the TUC and Which? issued a joint statement saying they were “extremely concerned” by the Government’s approach to small pension pots.

Scotgold CEO Chris Sangster said the results from the initial phase continue to confirm the high grade nature of the Cononish vein.