By GB News (Politics) | Created at 2024-11-20 17:51:36 | Updated at 2024-11-21 17:30:38
1 day ago
Labour is understood to have scrapped the previously announced pension "pot for life" initiative for retirement savers.
The proposal was brought forward by then-Chancellor Jeremy Hunt under the Conservative Government but will not be continued by his successor Rachel Reeves.
Speaking to Politico, a Department for Work and Pensions (DWP) official shared there is currently "no active work is being taken forward" to make Hunt's pledge a reality.
The official in question is believed to have knowledge of policy discussions but was not named to guarantee anonymity and to speak freely.
During his Autumn Budget 2023, the former Tory head of the Treasury unveiled his plan for movable workplace pensions.
Under this overhaul to the retirement system, the issue of millions of small workplace pension pots being lost as workers change jobs would have been addressed.
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Labour is continuing previously proposed reforms to the pension system
GETTY
In lieu of the status quo, employers would pay into one transferrable pension pot which would follow someone about from one job to the next.
Last November, DWP published a call for evidence but the recommended proposals.
The DWP published a call for evidence last November, but the proposal came under scrutiny from the pensions industry.
Kate Smith, the head of Pensions at Aegon, warned that Britons' retirement savings could be hit if the proposed overhaul is given the green light.
She explained: "The new ‘pot for life’ concept will give employees the ability to select their own pension provider and force their employer, as well as any future employers, to pay their employer and own employee contributions into this chosen pot.
"This could work well for a minority of higher paid employees who wish to select their own pension scheme but risks poorer retirement saver outcomes for millions of employees if economies of scale are lost.
"Costs are spread across scheme memberships, where those with higher pensions effectively ‘cross-subsidise’ the pensions of those with smaller pensions pots who tend to be the lower paid, enabling them to benefit from lower charges.
"Those left behind, on modest incomes, could face higher charges which means lower retirement incomes."
Former Chancellor Jeremy Hunt unveiled his plans for a pension "pot for life" last year
PA
Becky O’Connor, the director of Public Affairs at PensionBee, added: "The reality is people change jobs, pensions get left behind, some are forgotten and retirements suffer.
"Having all of the pensions someone acquires in one place makes sense - the method for how this happens is the subject of debate.
"The verdict from the public so far appears to favour the ‘pot for life’ model, which allows people to choose their own provider and ask their employer to pay in. But the research also showed that provision of information from employers or Government would be key to uptake."
GB News has contacted the DWP for comment.
