Big change to pensions could leave you £1,000 better off

New government plans to tidy up old, forgotten pensions could leave millions of workers better off in retirement.

If you’ve had several jobs, there’s a good chance you’ve built up lots of small pension pots over the years.

These often have less than £1,000 in them and can be tricky to keep track of.

Now, the government wants to make things simpler.

What’s changing?

Under new reforms announced by the Department for Work and Pensions (DWP), small pension pots will soon be automatically combined into one larger pot. This is called a “pension pot consolidator” and aims to:

• Cut admin costs
• Make pensions easier to manage
• Help your savings grow more efficiently

You won’t need to do anything – the system will do it for you – and you’ll still have the option to opt out if you’d prefer to keep things as they are.

Why it matters

There are currently around 13 million small pension pots in the UK, and the number is growing by about 1 million a year. Due to flat fees, these small pots can lose value and often end up forgotten.

By rolling them into one pot:

• You’ll pay fewer charges
• You’ll have one place to view your pension savings
• And your pot could grow faster over time

For the average worker, this could mean an extra £1,000 in their pension pot by the time they retire.

What else is in the plan?

The changes are part of a new Pension Schemes Bill being introduced this spring.

The aim is to help over 15 million people get more from their savings and boost pension pots by up to £11,000.

It will also introduce safeguards to protect savers.

Only schemes that meet certain rules, such as being good value and part of automatic enrolment, will be allowed to act as consolidators.

What people are saying

Minister for Pensions Torsten Bell says the plan will reduce hassle and boost savings for workers, calling it part of the government’s “Plan for Change” to improve living standards.

Which?, the consumer group, says it’s a positive step that will help people keep better track of their pensions and get better value.

And Standard Life added that having fewer pots makes it less likely people will lose track of their savings over time.

What you can do now

You don’t need to take action straight away, but it’s still worth checking what pensions you already have.

Use the free government pension tracing service if you’re unsure.

The changes could make retirement saving easier, more efficient, and more rewarding.

Are you worried about debt going into retirement?

If you’re heading towards retirement and still dealing with debt, you’re not alone.

We can help you find a way to manage your debts, boost your income and get your finances back on track. Whether you’re already retired or getting close, there are things you can do to improve your money situation and feel more in control.

We can help with:

• Independent debt advice
• Support with budgeting
• And make sure you’re claiming all the support you’re entitled too