Published On: Sat, Oct 3rd, 2020

Pension: The 3 details you’ll need to track your plans as DC scheme problems are revealed | Personal Finance | Finance


Pension pots can be built up throughout a person’s working life thanks to automatic enrolment rules. Under these rules, an employer must set up a pension scheme for all eligible employees which is then contributed to by both parties involved.

However, many people will usually jump from job to job throughout their career which can lead to several small pots being created.

It can be easy to lose track of these pots and as such, the government has set out plans to create “pensions dashboard” where people will be able to collate and manage all of their retirement assets.

Recently, the state also confirmed they will be launching a cross-sector working group to tackle the problem of deferred, small pension pots.

Responsibility for personal financial assets usually falls on saver’s shoulders but insight from Sacker & Partners, a law firm which works with firms within the pension industry, reveals that the very set up of these schemes may not be very well designed.

As Helen Ball, a Partner at the firm and the Head of DC (defined contribution), noted: “We are already seeing the difficulties that small pots create in our work advising DC schemes and their providers.

READ MORE: State pension: Calls for a ‘kickstart’ scheme for older workers rise

“They need to be coupled with other ‘nudges’ or even ‘pushes’ for benefit consolidation to really take off.

“As for how savers can manage and track down their pension savings – people need to remember that this is their money.

“When you’re enrolled in a scheme, keep the details somewhere safe with your other savings records, particularly if you change employers.

“There’s no need for anything fancy, just a file with details of the scheme name, its contact details and your membership number (if you have one) will do.

“If an individual has already lost track of previous pension arrangements there is a free government tracing service which can be used, the Pension Tracing Service”.

“The biggest challenge, in the relatively new Auto Enrolment environment, is catering for a huge swathe of individuals who are caught by the advice gap. This group comprises predominantly younger workers currently building up multiple pension pots.

“Many have yet to get to grips with the process of moving one scheme to another or consolidating different schemes.

“The problem lies in the wider professional financial advice sector, which demonstrably unable to provide the service and advice that financial watchdog the FCA demands, within a realistic cost framework.

“For example, asking a person to pay £750 to switch a former pension of £3,000 into a new employer’s scheme is simply not cost effective. In my view, a solution could be a simplified ‘advice light’ process, which doesn’t involve the reporting requirement of investment performance comparisons and customers’ attitudes to risk, and this could be for aggregated pot sizes of, say, less than £30,000.

“Otherwise these people will never be able to switch pots at an affordable price and receive the correct advice.”



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