"Consolidating various schemes, each with distinct benefits, into one-lifetime pot poses significant logistical challenges."
- Riz Malik, director at R3 Wealth
Following the announcement from the government regarding plans to launch "one pension pot for life", Newspage has sought the views of a selection of advisers.
Speaking during Wednesday's Budget, Chancellor Jeremy Hunt said the plans would give savers a "legal right to require a new employer to pay pension contributions into their existing pension".
At the moment, workplace pension arrangements can differ, but each employer tends to have either its own dedicated scheme or an arrangement with a UK pensions provider – often a big insurer - to provide a defined contribution scheme that all its employees pay into.
Joshua Gerstler, chartered financial planner at The Orchard Practice, said: "I like the idea in principle although it sounds like it would be an absolute nightmare to establish. For example, an employer of a big firm might have 1,000 employees across 30 different pension schemes. Would they have to make payments to each provider? Perhaps there would be a centralised system that receives contributions and then allocates them out to each pension company on every employee and employer's behalf? On the positive side, if you only ever have one pension pot, it is much easier to manage that from both an individual's point of view and an adviser's point of view."
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, commented: "This is an incoherent solution by a frankly incompetent Department for Work and Pensions. The administrative burden on business from paying individual pension contributions to different schemes each payroll will increase costs to a level that companies will stop employing people. Unworkable."
Riz Malik, director at R3 Wealth, added: "A single pension pot could be beneficial, particularly for individuals who have worked for multiple employers. However, consolidating various schemes, each with distinct benefits, into one-lifetime pot poses significant logistical challenges. Considering at this stage the government is launching a call for evidence on a lifetime provider model, the real-world implementation of such a scheme is unlikely anytime soon."
