Question to the Department for Work and Pensions:

To ask Her Majesty’s Government what steps they are taking to ensure value for money is achieved for the pension savings of ex-employees in cases where the employer transfers their pension pots to a pension arrangement exempt from the charge cap regulations.

The Occupational Pension Schemes (Charges and Governance) Regulations 2015 set out the tests that an arrangement in an occupational pension scheme to which the charge cap applies must meet in order to be designated as a default.

Where an employer or trustee switches some or all members’ contributions to a new default arrangement, any funds left in the old default arrangement will continue to be subject to the cap. Where an employer transfers all their employees’ pension pots to a new scheme, contributing members will be protected by the charge cap when the new arrangement meets the test for a default as set out in the Regulations. Where this is the case, ex-employees moved into the same arrangement will also be protected where they have made a contribution after the Regulations came into force.

Furthermore, the ban on Active Member Discounts will prevent providers from increasing charges for non-contributing members beyond those imposed on a member for whom such contributions are still being made.

I would be happy to receive any evidence from the Noble Baroness about ex-employees being transferred to an exempt arrangement in occupational schemes.