The DC scheme return data always gives an interesting at-a-glance view of the state of DC in the UK. 

 

DC is still in flux thanks to master trust consolidation and auto-enrolment, leading to some interesting extremes in the figures. For example, membership in schemes with 12 or more members increased by 33% over the past year and has increased by over 640% since the beginning of 2010. 

 

At the same time, the number of deferred memberships has increased by 45% in the past year, more than active membership (24%). This trend has been observed before but is worth dwelling on.  

 

The long tail of small pots, which members accumulate as they are automatically enrolled and then leave a job after two years or so, is increasingly becoming a problem – for the schemes and administrators but mainly, for the members. Already there is general agreement that people find it hard to keep on top of their different scheme memberships, and as it stands, we are building up further issues on this front. 

 

Ah, I hear you say, but we will have the pensions dashboard soon. We might – let’s hope so – and let’s hope that the data on it will be complete, because let’s face it, finding only half of your pension pots would not be desirable. 

 

Fact is that at the moment, unclaimed pots are going into the billions. The ABI said that 1.6m pension pots worth nearly £20bn could go unclaimed. That is £20bn not benefiting the people who saved the money and in whose name it is kept. The word scandal comes to mind. 

 

I am a firm believer in pot-follows-member, for the same reason that most people believe in the positive power of auto-enrolment – inertia. It is entirely inconsistent for a government to rely on inertia in one area because engagement has not worked – but rely on engagement in other, closely related areas. The FCA’s investment pathways speak for themselves when it comes to the success of member and consumer engagement. 

 

Enemies of pot-follows-member used to cite the risk that someone’s pension could be moved from a good arrangement into a worse one, but failed to consider that the opposite would apply as well. I can’t see how leaving money in a poorly run scheme is better than moving money to a poorly run scheme; the question also arises why it is accepted that some schemes are poorly run. Surely regulators should be aware of this? 

 

The risk of forgetting (or not even knowing) about the existence of one’s pension or with which provider it might be is surely one that tips the balance in favour of using inertia?  

 

With the dashboard on its way, this ship has probably sailed. While I welcome the dashboard, I don’t believe there is any guarantee that it will be able to deliver on all the things it is tasked with, or that it won’t be overtaken by new technological developments.  

 

Personally, I’d much rather use open banking to view my pensions and am convinced banks will try to jump into this gap (some already have). As such, perhaps the finder service will indeed be the dashboard’s core function – and so should be as complete and well functioning as possible. 

 

How do you think the problem of unclaimed pots is best solved?