Pensions minister Steve Webb has vowed short service refunds will not be part of the future pensions landscape, and warned employers not to factor them in when selecting a scheme.
Speaking at the annual Lane Clark & Peacock (LCP) Pensions Conference today, Webb said the Department for Work and Pensions (DWP) was looking at whether short service refunds could be addressed when it tackled the wider issue of transfers.
Under current rules workers leaving a job after fewer than two years can have their pension contributions refunded.
Webb described short service refunds as a "troubling feature of the system" as they did not fit with the government's aim of getting the population to save more for retirement.
He said the department would explore all the options on dealing with them including ensuring pension pots defaulted to a single provider when members changed employers, or insisting funds are transferred to new employers' schemes.
"My vision is instead of having lots of little pots, people will end up with one big fat pot, which would help them see the value of their pension and encourage them to shop around," he explained.
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