Xafinity website
After the mixed reactions to DWP's paper, 'Government response to the consultation: Improving transfers and dealing with small pension pots', Xafinity, the UK pensions and payments specialists, is encouraging the Department to push forward with a virtual amalgamation tool for pensions.
Of the proposed regulation changes, Xafinity believes the best option for the industry is for a virtual/web-based amalgamation tool for workers to monitor their pension pots across multiple schemes. This will enable progress to be made while the debate rages about the best kind of automatic transfer system ('pot follows worker' or 'central aggregator scheme'). In the meantime, it will allow the industry to continue with current transfer systems, and the choice of transfer will stay with the worker.
Ted Belmont, director at Xafinity Consulting, said "We believe the proposed amalgamation tool is the least contentious system for improving transfers of any size of pension. This system could be introduced relatively quickly and would have a much wider scope than the DWP's proposals, which are limited to DC schemes used for auto-enrolment. A virtual system can extend to DB schemes as well as legacy schemes of all kinds.
"This type of tool will allow all pension savers, large and small, to view their amalgamated pension pot's size at any point in their life. Giving people access to their entire pension portfolio in one place will also help with retirement planning and increase understanding about how pension saving works."
Mr Belmont also pointed out that introducing a virtual aggregator would leave all the other options open. "Looking further ahead, a virtual aggregator could sit very comfortably alongside either a 'pot follows member' system or a physical central aggregator", he said.
