Proposals to let employees choose where their company pensions are held will reportedly be discussed by the government and representatives from major pension providers.
According to the Daily Telegraph, pensions and financial inclusion minister Guy Opperman (pictured) will attend a meeting organised by representatives from major firms to discuss whether savers should be able to pick their own pension provider.
More than nine million employees are currently saving into their pensions as a result of automatic enrolment (AE). Because they are automatically enrolled, however, the majority end up in a pre-arranged scheme chosen by an employer and a pension provider.
Each time an employee changes work they are enrolled into a new pension. This has led the likes of Hargreaves Lansdown to argue millions more pension accounts than necessary are opened over time, which it argued costs hundreds of millions of pounds each year.
As a solution, the pension provider and D2C platform has suggested the current defaults to AE should remain in place, but that individuals who have an existing AE pension from previous employment, or who wish actively to choose their pension provider, should have a right to choose that arrangement in preference to being forced to join their new employer’s contribution scheme.
A spokesperson at Hargreaves Lansdown said it could not comment on any possible meetings with the Department for Work and Pensions (DWP), but added they would like to see the DWP take it on as a policy objective.
The DWP told Professional Adviser the government’s position on the proposal – that making changes to the AE model is not an immediately priority – was unchanged.
‘Resist this siren call’
NOW: Pensions director of policy Adrian Boulding argued changing the policy could be burdensome for employers, and that parties were pushing the agenda for their own gain.
“The employer does not just send money as they do with salaries, they have to supply a lot of additional data so that the pension provider can verify the correct statutory contributions are being paid,” he said.
“This proposal would require the employer to engage in regular verification checks with a multitude of different institutions making an already difficult job virtually impossible.”
He added: “I see this as nothing more than a cynical attempt by high-charging self-invested personal pension providers to cherry-pick the juiciest members out of a workplace scheme to the detriment of all the others.
“Government should resist this siren call and keep employers at the heart of pension provision where they belong.”