Pension providers have called for the pension dashboard to come into force before a solution for deferred small pots is confirmed.
In response to the Department for Work and Pensions' consultation, ‘Ending the proliferation of deferred small pots’, which closes today (September 5), Jamie Jenkins, director of policy and communications at Royal London, said the industry is in a different place to where it was 10 years ago.
“We are now probably a couple of years - maybe three years - from the launch of the pensions dashboard,” he said.
“Clearly that's been deferred quite considerably in recent months in terms of that it is now going to happen in 2026.
“A lot of work has been done and a lot of the infrastructure for that is around connecting data, policy information, member data between different pension providers. So a lot of this plumbing and architecture has been designed but still has to be implemented and that feels like a really important project.”
He explained that so far, what has been done on small pots is building something which is probably a similar size or even bigger than the project for the dashboard.
The proposal is that there will be a central clearing house or a central register that will act as an independent body on behalf of the industry to exchange data and ultimately to transfer money between providers, in order to facilitate large consolidators to take small pension pots.
“For me though, if I go back to the dashboard for a second, it feels like there is a sort of sequencing here because rather than embark on another 2, 3, 4 year project that involves major kind of IT build, should we not use the architecture that we've started to work on for the pensions dashboard,” Jenkins said.
“This is alluded to in the consultation, but it feels like it's slightly underplayed, and I feel like it should be a bigger theme.
“We should complete and digitise pensions through the dashboard, create the infrastructure and then whatever the solution, whether that is indeed large consolidators, default consolidators or pot follows members, could be based upon that kind of architecture.”
Jenkins explained that we are currently in an environment where we've been quick to rule out member engagement in the consolidation of small pots.
“I'm pretty tech savvy, and I'm immersed in the industry and I'm pretty on top of what I've got pension wise, but of course, that would be because of work. I work in this industry,” he said.
“A lot of people my age or older than me who are not engaged with this industry at all, haven't necessarily adopted signing up to their app and managing all the finances online.
“But younger people and those who are starting work for the first time only know online technology and only would expect to be able to do things through apps and through interconnected digital services and they don't know anything different.”
