UK Pensions Minister Steve Webb has announced a consultation on the transfer of individual pension pots - and offered a few possible solutions to the problem

Currently, many UK workers build up individual pension savings with different employers and in different schemes, leading to fragmented and uneconomical saving arrangements.

Speaking at the NAPF Trustee conference, which took place in London this morning (06.12.12), Webb outlined two options to help individuals avoid accumulating numerous pension pots. He stressed that the consultation would be a "genuine" one and welcomed other solutions.

"It is one of those consultations where we haven't made our mind up yet," the Liberal Democrat MP joked.

One solution outlined by the Minister was to link the pot to the worker. This would mean it would move jobs alongside the member. However, one possible downside would be if a worker moved from a company with a good pension scheme, to one which had a scheme which just adhered to the minimum requirements.

"If you go from a good scheme to a not-so-good scheme, are you going to come back and sue me in ten years' time," he said, adding that he wouldn't "fancy that very much".

Another solution would involve 'stranded' pots being defaulted into a third party scheme or Super Trust specifically designed for that purpose. Whether there would be one such scheme or trust, or multiple ones, Webb said he was open to suggestions.

"Should the pot follow the person? Should there be a default where you change job and like some sort of magnet your money goes with you unless you actively say that it shouldn't?" asked Webb.

The consultation into these issues of transfers, small pots and short service refunds would be launched "shortly", Webb said.

He also called upon trustees to look into another matter; that of the Government's "Red Tape Challenge", in which Ministers are looking to make regulatory issues easier, update them or lose them completely.

Webb said that when he asks trustees and managers which regulations made their jobs unnecessarily hard he generally does not get an answer. Now, he said, it was up to the trustees to be clear and tell him precisely which matters these were so he could review them.

"Regulation will be scrapped if I cannot justify it," he claimed.

azeevalkink@wilmington.co.uk