Automatic transfers consolidating pension savings

It remains to be seen how great an effect the proposals will have.

Only low-paid workers and those who change jobs frequently should end up falling with the ambit of the new regime.

A pot will only be eligible for automatic transfer if it is worth under GBP 10,000 and was created after a certain date, so the legislation will not have retrospective effect.

Workers will be able to opt out of the legislation and leave their pension pots where they are when they get a new job (or else transfer them to another pension vehicle of their own choosing).

Current annual allowance = £40,000 (NB reduces to £4,000 if you've started taking money from your pension). You can top up your allowance for the current tax year with any allowance you didn’t use from the previous three tax years.

The problem is bad enough at the moment: recent research by Age UK indicates that nearly a quarter of workers have lost track of at least one pension pot.A worker earning the national average salary of GBP 26,500 with 8% pension contributions i.e.the level required by the automatic enrolment legislation will need to stay in post for less than five years before his pot exceeds the GBP 10,000 limit (leaving aside inflation, investment returns and fees).The immediate consequence of the new legislation for the industry will be a new layer of regulation and compliance.However, schemes and providers will be spared the sheer administrative burden of dealing with 50 million small stranded pots.

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