This is one of a number of questions people ask about pensions, which Steve is given the unenviable job of answering. This is his go, I suspect this may be one for the private sector to get on with , without legislation. The small ones below need trustees to get on with and in time an override for GPP providers – “when” is a matter of speculation

Automatic consolidation of small pots

The second initiative planned by the government is to automatically consolidate the smallest ‘left-behind’ pension pots.

The Pension Schemes Bill, currently going through Parliament, provides the framework for a new mechanism whereby left-behind pots under £1,000 (known as ‘micro’ pots) will in future be automatically moved to one of a small number of centralised ‘consolidator’ schemes.

We do not yet know who these schemes will be, but they are likely to be highly regulated to make sure that people’s small pension pots are moved to somewhere that will provide good value for money.

The idea is that if someone changes job for a second time and leaves behind a second small pot this will be automatically combined with the first small pot in the consolidator scheme, and so on for all subsequent left-behind pots.

Although the process will be limited to pots under £1,000, the legislation allows the government to gradually raise this threshold in future so that progressively larger pots will be automatically combined. This will save individuals the hassle of having to do this for themselves.

Unfortunately, the implementation of this policy is still years away. The legislation envisages that pots will not start moving in this way until around 2030, and is likely to remain limited to micro pots while the new system is bedding in.

Realistically, we are many years away from an automatic system that does all of this for you, especially if some of your pots are over the £1,000 threshold.

In the meantime, therefore, if your wife does want to consolidate her pension pots, she will have to do this herself.

If they are modern pots created under automatic enrolment then the process should be relatively straightforward, though if she has older pots then there can be complications. For example, some pensions (especially older ones) may have valuable features such as enhanced tax-free cash or guaranteed annuity rates where she would want to think carefully before throwing these away.