The People’s Pension, which has 6.4m members in its master trust, is urging other large auto-enrolment (AE) providers to adopt a ‘single pot’ approach. The move aims to tackle the proliferation of pension accounts that individuals accumulate over their working lives, often with varying charging structures.
The ‘single pot’ model offered by The People’s Pension allows members to maintain a single pension account even when they switch employers that use the same master trust, rather than creating separate accounts with potentially different fee structures.
For instance, if a member originally joined the master trust through an employer’s scheme with a 0.3 per cent base charge but later switched to a different employer within the same master trust with a 0.5 per cent charge, they would continue to pay the lower fee on all their savings.
The People’s Pension says this approach has become increasingly significant with the average worker changing jobs around 11 times during their career and with further consolidation in the master trust market, individuals likely.
Analysis by The People’s Pension indicates that a saver with £100,000 split between two pots with a provider that does not offer the ‘single pot’ approach could pay over £11,000 more in charges over a 20-year period.
Patrick Heath-Lay, CEO of The People’s Pension, says: “Our members benefit from having one pot with a best price guarantee, meaning that they pay just one set of charges and have a better chance of receiving a rebate on the charges they pay. We believe that if other pension providers are really serious about putting the needs of their customers first, they should introduce the single pot model and ensure that individuals pay the lowest rate of charges available to them. This would also go some way toward reducing the number of small pots that are currently in circulation.”
The call for a ‘single pot’ approach aligns with efforts to simplify pension management, enhance transparency, and ensure that savers receive the most cost-effective solutions as they plan for their financial future.