Commenting on its response to the Government’s pot for life consultation, Paul Waters, Head of DC Markets, Hymans Robertson, said:

The lifetime provider model - so-called ‘pot for life’ - does not tackle the savings adequacy challenge for DC savers. The government’s proposal risks making the situation worse by placing more responsibility on savers and away from employers, without addressing how overall savings rates will be increased. Many DC scheme members lack the financial education and confidence to choose their own pension provider. The pot for life model risks members making poor decisions based on the cheapest or best marketed solutions, rather than those offering the best value for money.

“The large amount of time, resources, and infrastructure that creating a pot for life model would require risks distracting from existing priorities in DC pensions, which should be tackled first. Advancing small pot solutions, the government’s Value for Money framework, and the roll-out of the Pensions Dashboard should be completed, and would help create a more suitable environment for a lifetime pension model in due course. 

“What a pot for life does do is leverage the power of inertia such that members build up savings in one place, making it more likely that members will engage with and understand their pension.”