Pensions - Articles - Delivering Value for Money for pension savers


Value for Money key consideration in developing consolidation framework. Leveraging anticipated Pension Dashboard successes at identifying pots also important for automatic consolidation. Figures raise pension adequacy concerns highlighting need for increased minimum auto-enrolment contributions and investment strategy governance.

 Broadstone has called for half a dozen consolidators and a transparent regulatory framework to deliver Value for Money (VFM) for pension savers, in its response to the DWP’s consultation on small pots.

 The independent pension, investment and employee benefits consultancy concluded that the consolidation model would be best to achieve a simple, solution to the small pots problems.

 It would require low level engagement from savers and create the highest chance of good outcomes, avoiding unintended tax consequences, while also placing a low burden on sponsors.

 Broadstone called for six default consolidators operating under a regulatory framework drawn up by the industry, the Regulator and the Government.

 This framework would have VFM and quality pension provision at its heart, alongside a low level of due diligence once pots and destinations are identified. It is suggested that the Pensions Dashboard should play a key role in achieving this latter point.

 In addition, Broadstone said the Government should provide a minimum pension age override so schemes do not need to amend rules to accept a benefit with a lower normal minimum pension age and exempt hybrid schemes where members may benefit from interaction with a DB scheme for PCLS purposes.

 It did not think the pot follows member option should be pursued.

 Commenting on the response David Brooks, Head of Policy at Broadstone, said: “With billions of pounds accumulated in small pots, a transparent and simple solution could provide a boost to many people’s retirement incomes.

 “An effective consolidation model would be low maintenance for both members and sponsors, ensuring value for money. It would leverage the anticipated success of the Pensions Dashboard in connecting members with their pension pots and engaging more people with their later-life savings.”

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