A ‘Lifetime Provider Model’ is still being considered by the Department for Work and Pensions (DWP) despite numerous concerns raised by the industry since it was announced in the Autumn Statement by chancellor of the exchequer Jeremy Hunt.

Back in November, Hunt said the government was looking to simplify the pensions market by allowing individuals to move towards having one pension ‘pot for life’.

Today, the Society of Pension Professionals (SPP) published a paper – Just one pension? – calling on the government to “think again” about the Lifetime Provider Model.

Although the SPP paper acknowledges there may be some benefits to the model, overall, the conclusion is that such an approach would be complex and costly and that alternatives such as the government’s pension dashboards project could more effectively solve the small pension pots’ problem.

Steve Hitchiner, president of the SPP, said: “In our view, there are more effective alternatives, most notably a fully operational pensions dashboard system, that would be a far better use of resources.”

He said that as well as making any requirement for a Lifetime Provider Model largely redundant, concentrating on other pension policies that are already in motion increases the chances of those policies succeeding — a genuine win-win solution.

This is, however, not the first time these concerns were raised. The pensions industry has been quite vocal over their concerns since the chancellor introduced these proposals even before the call for evidence was launched, with the industry initially saying the plans would need “careful consideration” as they risk undermining the current system.

With the consultation on the proposals ending in January, a number of pension consultants took the opportunity to repeat their concerns.

Richard Birkin, partner at Isio, for example, said that while the government looking to innovate the pension market is “encouraging” and while the “pot for life” model has “many attractions”, there is a raft of government initiatives already which should be given time to bed in before further reforms are contemplated, such as the pension dashboards.

LCP’s partner Laura Myers branded the proposals a “distraction” from more urgent initiatives such as taking forward the recent legislation on increasing automatic enrolment pension contribution.

This was echoed by the Association of British Insurers (ABI) which said the introduction of a Lifetime Provider Model risks undermining the success of auto-enrolment.

The industry was relieved in March when the government seemed to “cool-off” on the pot for life model as it was not mentioned in the Spring Budget, while accompanying documents said the government was “exploring” the idea instead compared to branding the proposal a “legal right”.

The choice of words suggested that the government was moving away from the idea.

However, when contacted by IPE today, DWP confirmed it is still considering the option, stating the response to the call for evidence will be published in due course.

A spokesperson for DWP said: “A Lifetime Provider Model that allows workers to have one pot for life could reduce barriers to engagement and make it easier to understand and plan for retirement.

“That is why the chancellor announced at the Budget that we will continue to explore if this model could improve outcomes for savers.”

It is understood that no decisions have yet been made, and the responses to the consultation have identified a range of considerations, merits and impacts that will help inform the government’s view on this.

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