We all like the idea of having all our retirement funds in a big pot which we can manage efficiently and value easily. But not at any price!

This link takes you to a version of Aegon’s submission to Government on “operation small pot to big pot”.

As I suspected, the debate is polarised between those who want to physically transfer all the money into a single “pot” and those who favour a virtual aggregator – some kind of electronic register that points you at your entitlement and helps you manage them before and at the point when you purchase an annuity with your money.

If you’ve read my previous blogs, you’ll know I’m in favour of the virtual solution.

It comes as no surprise to discover the NAPF coming down on the side of physical transfer and I fear that political expediency will drive us to use NEST much as the Australians have done with their “Super rubbish tip“.

Political expediency maybe but such an approach does nothing to improve member outcomes.

If we are trying to introduce efficiency;- losing 5-10% of the benefit in dilution levies and advisory costs is the wrong way to do it. Cut out the advisory costs and we’ll be seeing all kinds of preserved goodies being chucked in the skip – guaranteed annuity rates, terminal bonuses and the like.

The virtual aggregator is efficient and provides the single view along the way and at the moment of “money purchase“.

I fear that the DWP’s agenda may be to feed NEST but I’d rather write off the £300m we’ve spent on it, than use NEST as the dustbin of our pension dreams.

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