Help for Diligent Pension Savers.

The government has to be congratulated for their newly pledged intention to help a significant group of people who have been planning for their retirement by saving in a pension scheme. Many end up with a small pension pot, either because they have not saved enough or have moved around a lot in their employment and are disadvantaged as a result. Previously if a worker left employment within two years they were entitled to a cash refund of any money that they had contributed to the pension scheme. Typically this money was lost to a person’s pension fund as people chose to spend or save this amount. This is hardly surprising as existing arrangements are complicated and beyond the comprehension of the man in the street.

How are things to change? The government want to make it easier for workers to transfer amounts to a new employer’s scheme when they change employment thus allowing a pension pot to continue to grow. Another option will be that people can move their money to a state sponsored scheme should they wish to do so.

A more important consideration is that fees charged to enable this type of transfer are going to be reduced. At present the situation is that if someone leaves a scheme to join another or indeed leaves their pension with a former employer, they are charged often exorbitant so-called management fees. The government is determined to end this situation to enable money to be transferred easier.

Indeed the government will be doing the workforce a favour if they make it easier for people to understand their situation regarding accumulated pension rights. Then it will be so much easier to plan accordingly for the future. A number of agencies including Which? have been actively campaigning for this for a long time. Let us hope that this small step is a larger step to more pension clarity and more help for the average worker who does not have a large company to help him organise for his retirement and needs all the help he can get to enable his retirement to be financially sound.

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