The UK’s Department for Work and Pensions (DWP) has said that the solution to small pots proliferation will be to leverage off pension dashboard infrastructure.

Speaking at the Pensions and Lifetime Savings Association (PLSA) annual conference in Manchester this week, Rob O’Carroll, deputy director of automatic enrolment and defined contribution (DC) policy at DWP, said now is the time for the pensions industry to work together with government and regulators to deliver a solution to small pots proliferation.

O’Carroll branded it a “hugely complex and challenging area”, adding that the solution will require a new piece of data infrastructure for schemes to be able to see which of their default consolidators their employees have been allocated to.

He added that currently there isn’t an internal infrastructure around that and DWP wants to “leverage what has been developed, or is being developed, through the pensions dashboard”.

O’Carroll added that as part of the DWP’s consultation – Ending the proliferation of deferred small pension pots – a delivery group will be set up to bring together schemes, employers and payroll data experts, to design the delivery of a solution that “is cost-effective and deliverable”.

He said that while this work is going to require primary legislation, which will be dependent on the parliamentary timetable, it is “really vital” for the parliament that the delivery group provides an “opportunity for input” into what will be developed and written into primary and secondary legislation.

The consultation – which opend 11 July and closed 5 September – proposes setting up a small number of authorised schemes to act as a consolidator of deferred pots under £1,000 after dropping the alternative ‘pot follows member’ model proposed in a previous call for evidence.

The government is currently “analysing” responses and expects to “take forward primary legislation to implement a statutory framework as parliamentary time allows, with further detail underpinning this to be covered in secondary legislation – which will be subject to formal consultation”.

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