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Our response to the DWP consultation on ending the proliferation of deferred small pension pots


Earlier this week we submitted our response to the DWP consultation on ending the proliferation of deferred small pension pots. The success of auto-enrolment has led to an exponential increase in numbers of small pots, which is one of the biggest challenges facing the pensions industry today, and unless something is done, they will continue to grow rapidly. Estimates by the Pensions Policy Institute have shown a likelihood of over 27 million deferred small pots by 2035, and their research suggests there could be a link between the increase of small pots and lost pots, which is a concern.


DWP opened their consultation on ending the proliferation of deferred small pension pots in July following their call for evidence earlier this year. Even though this may not significantly affect our clients directly, we feel that it is such an important issue which could shape the future of pensions, and therefore believe it vital that we should respond.


In principle we support the DWP’s proposal of a consolidator framework and agree there should be a default consolidator scheme. However, with the development of Pensions Dashboards (PDP) and the infrastructure which has already been built, it seems an ideal opportunity to also serve as the central registry for schemes to use as a ‘look up service’.


Our suggestion is therefore not to build something new, which will take time and involve a significant industry cost to build, test and maintain. Instead, we have suggested that the PDP central digital architecture, a mechanism that is already being built, could provide all the information that a separate central registry would deliver, using the same secure, protected environment. Being close to the PDP with our Dashboards Connect ISP, we can see that some minimal changes to the current build could allow for schemes to view data without a member’s consent, in just the same way a proposed central registry would.


We’d therefore suggest thinking about the future innovation of Pensions Dashboards as an all-encompassing solution to these important challenges we face today.


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