Troy Clutterbuck, CEO, NOW: Pensions comments on today’s ONS Occupation Pension Schemes Survey, 2018:
“Last year the number of occupational pension schemes increased by 4.5 million to a total of 45.6 million compared to 41.1 million in 2017. This is fantastic news as 9.9 million people are now saving into a private sector pension pot for their futures, but this also poses problems. There has been a significant increase in the number of preserved (deferred)* pensions reaching 13.6 million in 2018, up from 11.6 million the previous year.
“This spike is mainly a result of auto enrolment and changing employment patterns with people moving jobs more often than previous generations. With each new job comes a new pension pot and this pension pot proliferation shows no sign of slowing.
“The government left a gaping hole when it abolished short service refunds in 2015 and then subsequently decided not to give the green light to an automatic “pot follows member” transfers system. This has left the industry with a growing problem which can only be resolved by the government and industry working together to streamline pension savings.”
*Preserved pensions – when active employee members cease working for the scheme’s sponsoring employer, they usually have a choice of what to do with the benefits accrued in the scheme. The default position for members is generally a preserved pension entitlement, where the rights remain in the scheme and a pension comes into payment at normal pension age. However, a short service refund may (depending on scheme rules) be offered for members with less than two years’ service in a defined benefit (DB) scheme and fewer than 30 days service in a defined contribution (DC) scheme.