Work and Pensions
Anne Begg (Aberdeen South, Labour)
To ask the Secretary of State for Work and Pensions what assessment he has made of the potential effects of his plans for the transfer of small pension pots on (a) women, (b) self-employed people and (c) individuals who join and leave the labour market on a regular basis, such as seasonal workers.
Steve Webb (Minister of State (Pensions), Work and Pensions; Thornbury and Yate, Liberal Democrat)
The Department is working with all those with an interest to understand how automatic transfers of pension pots into the new employer's scheme might work. In considering all the issues, it will look at the potential impact that automatic transfers might have on different individuals.
The Impact Assessment published alongside the Government's consultation response indicated it believed there are potentially significant benefits to individuals through consolidation of their pension savings—including through greater engagement, lower charges and higher retirement incomes for members.
On current projections, the Department estimates that, if pots move automatically with individuals when they change jobs, women will see their pension savings spread across fewer schemes, and be even less likely than men to retire with five or more dormant workplace DC pots, and more likely to retire with no dormant DC pots. (See Table 1.)
It is not possible or meaningful to present similar estimates for seasonal workers or self-employed people as most individuals will not remain permanently in these labour market states during their entire working lives.
|Table 1: Proportion of individuals retiring between 2050 and 2060 with dormant workplace DC pots|
|If pots move automatically with individual from job to job|
|Based on current policies||£2,000 limit||£5,000 limit||£10,000 limit||£20,000 limit|
|No dormant pots||9.4||9.4||9.9||10.8||12.1|
|Five or more||24.8||18.4||10.3||4.6||1.7|
|No dormant pots||11.2||11.6||12.7||13.9||17.0|
|Five or more||26.9||15.6||7.4||2.5||0.2|
|Notes: 1. Figures based on PENSIM2. 2. Percentages relate to individuals who reach retirement age between 2050 and 2060. 3. Data are column percentages.|