Question to the Department for Work and Pensions:

To ask Her Majesty's Government what estimate they have made of the number of small pension savings pots held by individuals; whether that number has increased in the last five years and by how much; what assessment they have made of the problems arising from any such increase; what plans they have to address those problems; and what assessment they have made of the impact of that increase on workers in low paid high turnover jobs.

So far, the Government’s automatic enrolment (AE) programme has led to more than 9.4 million employees being automatically enrolled in a workplace pension, with more than 1.1 million employers meeting their duties as of the end of February. We do not routinely collect data on the number or size of individuals’ pension pots, but it is clear that many of these pots will be small at this early stage. However, the proposals announced in the 2017 Review of Automatic Enrolment will mean pension saving starting from a younger age, which we know makes a real difference. A National Minimum Wage earner who starts saving from 22 could build a pot of £82,000 (in today’s earnings terms) by state pension age. Had they started saving at 18, that pot could be £92,000 (12 per cent larger). We will keep the issue of small pots under review now that the roll-out of AE is almost complete.

As of March 2017, 94 per cent of eligible jobholders automatically enrolled in an occupational defined contribution scheme were enrolled in a Master Trust. The authorisation and supervision regime introduced by the Pension Schemes Act 2017 will ensure that members of Master Trust schemes, who will often have small pension pots, have equivalent protection to people saving in other types of pension schemes.

Dormant pots can be eroded over time by costs and charges, and the smaller the dormant pot, the greater the impact. Members have the right to know all the costs and charges they are paying. The Government consulted last year on regulations requiring charges and transaction costs to be given to defined contribution occupational pension scheme members and to be published. We laid regulations to achieve this on 26 February, and they will come into force on 6 April. The Financial Conduct Authority plan to consult on corresponding rules for workplace personal pension schemes in the second quarter of this year.

Members could also benefit from the introduction of the pensions dashboard, which should make it easier to see all their pots in one place when they choose to do so. This would enable them to feel in control and take ownership of their pensions. We are currently conducting a feasibility study looking at how we can make the pensions dashboard a reality, and will publish our findings later in the spring.