DWP consultation on Ending the proliferation of deferred small pots - Which? response

Which? welcomes the government’s response to its previous call for evidence and the subsequent public consultation. As the consultation sets out, on average more than 1m deferred pots worth less than £1,000 have been created annually since automatic enrolment began and the rate of creation is likely increasing. It is imperative that a process of automatic consolidation is introduced to tackle this problem. The resulting benefits to savers should include fewer lost and unaccessed pots, lower charges as loss-making pots are taken out of the system, better returns if schemes can achieve greater scale, and less hassle accessing their retirement funds.

Much work remains to develop an automatic consolidation process that works in members’ interest, but we are broadly supportive of the proposals set out in the consultation document. We are comfortable with the intention to progress with a multiple default consolidator model. We also support the proposals for a 12-month period of no active contributions before a pot becomes eligible for consolidation and for an initial pot size limit of £1,000. However, we believe the government should mandate that providers undertake same-scheme consolidation.