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Government’s pension reform attacked

Government’s pension reform attacked

Category: Pensions

Updated: 16/10/2012
First Published: 16/10/2012

MONEYFACTS ARCHIVE
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Critics have attacked the Government's plans to make it easier for employees to transfer pensions from one employer to another when they change jobs.

In a letter published by the Daily Telegraph, the National Association of Pension Funds, the Trade Union Congress, Age UK and Which? say workers who switch jobs several times during their careers could lose up to a quarter of their potential pension funds under the Government's proposed reforms.

The pension and consumer groups have warned that, under the proposed plans, workers could lose out financially if they moved their growing pension pot to a new fund each time they changed jobs due to higher fees, and the risk of transferring into a poorly managed scheme.

"We agree with the Government that a system that automatically transfers these small pots is necessary," the letter stated.

"However, the Government's solution, where the pot follows an employee who moves job, is impractical and risks reducing individuals' retirement income.

"We urge the Government instead to consider alternative models for automatic pension transfers."

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