MILLIONS of workers could soon be able to build up a pension “pot for life” under radical new plans.
In his Autumn Statement, Chancellor Jeremy Hunt announced he will consult on giving pension savers a “legal right to require a new employer to pay pension contributions into their existing pension”.
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Companies are currently obliged to sign up staff to their own pension plans chosen by them.
But this has led to workers often having several different pensions as they switch jobs meaning tens of millions of pots in the system.
Having a single pension pot system has been adopted by countries including Australia.
Speaking in the Commons, Mr Hunt said: “I will also consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose, meaning people can move to having one pension pot for life.”
A Treasury insider told FT.com: “British workers deserve to get the most out of their pensions, so we will make it easier for employees to keep track of their hard-earned savings.
“Helping people keep the same pension pot will stop billions of pounds being needlessly lost and make sure tomorrow’s pensioners benefit from every penny they save.”
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Steve Webb, ex-Pensions Minister, said about pension pots for life: “I think this is a terrible idea. It could lead to a fragmentation of the pension system.
“Lower earners risk being left worse off if they can no longer access a good value workplace pension.”
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Mr Hunt has also earmarked a new growth fund as part of the British Business Bank which will channel pension funds into start-up companies.
He told the Commons: “By 2030, the majority of workplace DC savers will have their pension pots managed in schemes of over £30bn and by 2040 all local government pension funds will be invested in pools of £200bn or more.
” I will support the establishment of investment vehicles for pension funds to use including through the LIFTS competition, a new Growth Fund run by the British Business Bank and opening the PPF as an investment vehicle for smaller DB pension schemes.”
The Chancellor said the pension reforms could help unlock an extra £75bn of financing for high growth companies by 2030 and provide an extra £1000 a year in retirement for an average earner saving from 18.
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