UK – Pension – Reforms ‘could cut retirement income’

Workers who switch jobs several times could lose up to a quarter of their potential pension funds under proposed reforms, critics have warned.

The new system of automatic enrolment into pensions means that an increasing number of workers will have savings for their retirement.

However, with the average employee changing jobs 11 times during their working lives, there is a danger that they build up a collection of small pension pots.

Many will lie dormant after they leave their job, with no further contributions for the employer or employee, although they will still be invested and continue to accrue any investment returns.

Under government plans, workers will be able to transfer their pension pots between employers as they move jobs.

However, the pension and consumer groups warn that workers could face higher fees, and a worse deal if they move their built-up pension pot to a new scheme each time.

“Pots could be transferred into poorly managed schemes, with high charges and low investment returns,” they say in the letter.

“There would be significant administration burdens and transaction costs imposed on pension schemes – ultimately paid for by consumers.”…

via BBC News – Pension reforms plans ‘could cut retirement income’.