Commenting on the Department of Work and Pension’s (DWP’s) response (PDF 950 KB) to the consultation on small pension pots, Gurmukh Hayre, head of DC pensions at KPMG in the UK said:
“The DWP’s response is welcome, but we believe that they may be heading down the wrong route by favouring the option of a member’s pension pot going with them to a new employer each time they change jobs. The consultation feedback clearly highlighted that there was wide spread support for some form of aggregator scheme, whilst the DWP’s favoured option (of small pension pot moving with members to new employers) was only supported by a fifth of the respondents.
“The real challenge with this option will be the additional administration which would fall on employers in dealing with transfers from many different employers, albeit through a non-advised approach. This additional burden will be unwelcome particularly coming shortly after the significant new challenges of auto enrolment.
“It would appear that the only winners will be the pension providers who will continue to see members’ pots moving around the market and charges being incurred each time. Surely, even a restricted number of aggregator schemes would be more efficient?”
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Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.