• March 29, 2024
 Pensions provider issues warning on cost of multiple pension pots

Pensions provider issues warning on cost of multiple pension pots

A pensions provider has warned that the repercussions resulting from multiple pension pots are being ignored by the Government.

Hargreaves Lansdown claims that the auto-enrolment pension system faces extensive excess costs every year, resulting from the creation of a new pension pot every time somebody moves job.

On average, people will go through 11 jobs during their working lives, with around 25% working for over 14 employers.

In turn, as they will be required to join a new pension with their new employer, the pension from their last job is suspended.

Tom McPhail, the head of policy at Hargraves Lansdown highlighted the impact of this, stating: “If we forced employees to change their bank account every time they changed jobs there would be an outcry, yet this is what auto-enrolment does with their pensions.”

According to a forecast from the Department of Work and Pensions, there will be around 50 million dormant pensions by the middle of the century, which will naturally lead to additional administration charges mounting up.

As a potential solution, the pension provider suggests that when people change jobs, they should have the pension contributions of their new employer paid into their existing pension.

As well as helping to promote better pension engagement, Hargreaves Lansdown states that this could also help with issues around auto-enrolling self-employed workers.

Georgia Owen

Georgia is the Senior Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Wills and Probate.