UK - Short service refunds go "against the spirit" of auto-enrolment and should not be part of the UK's pension landscape, pensions minister Steve Webb has said.
Addressing a conference organised by the Confederation of British Industry, the liberal democrat minister insisted the issue would be addressed at the same time as the question of pension savings transfers, as the imminent introduction of auto-enrolment otherwise risked leaving the average worker with nearly a dozen separate pension pots.
Asked about the current ban on transfers out of the incoming National Employment Savings Trust - a cornerstone of the 2012 reforms - he refused to commit to ending the practice once it came up for review in 2017.
But he conceded that a recent review that came down in favour of allowing the movement of pension savings had presented some "powerful arguments".
He insisted the auto-enrolment reforms had increased pension savings at its heart, but said the issue of short service refunds - whereby employers are able to reclaim contributions made to a worker's pension if he leaves within two years - went against said goal.
"What we want to do is make sure that's not part of the long-term pension landscape," he said, arguing that proposals addressing these issues would be published in November.
The minister highlighted the many benefits of reducing the number of individual pots, saying that not only would it increase the visibility of retirement saving, but also lower administration fees for schemes.
He argued short service refunds needed to be addressed, as otherwise the industry and employers would invest in auto-enrolment reforms only for the infrastructure to have "a dirty great hole at the heart of it" for precisely those workers who stood to gain the most from the changes.
Webb said amendments could be introduced easily to abolish the refunds, but that the issue should tackled at the same time as pension pot transfers.
"We recognise it's an issue for the firms and the schemes, and we want to facilitate, for example, getting those small pots out of the schemes so they are no longer a burden to the scheme," he said.