Automatic transfers
Automatic transfers

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Automatic transfers
  • Timing the introduction of automatic transfers
  • Implementation model
  • Which schemes would have been included in the automatic transfers system?
  • Eligibility criteria for pension pots
  • Key stages in the automatic transfer process
  • Compliance

STOP-PRESS: Measures to introduce a system of automatic transfers (also known as ‘pot follows member’), whereby a pension pot would follow the member into their new scheme as they move employment, have been put on hold indefinitely.

The introduction of auto-enrolment has led to a substantial increase in the number of small dormant defined contribution (DC) pension pots. This is regarded as an issue by the government and the pension industry because:

  1. it is inefficient for pension providers to administer small dormant pension pots, and

  2. there is an increased risk of members losing track of multiple small pension pots scattered between pension providers

To address the problem, in July 2012, the government resolved to bring forward legislation introducing a system of automatic transfers of small DC pension pots (also known as ‘pot follows member’) whereby a pension pot would effectively follow the member into their new scheme as they move employment. The legislative framework for a system of automatic transfers was subsequently enacted through the Pensions Act 2014, s 33, Sch 17, under which regulations can be made to implement such a system.

In February 2015, the government published a paper setting out how it expected to implement the system of automatic transfers and its preferred implementation model. It intended to develop and