Pensions industry should drive small pension pots consolidation by 2030, says Pensions UK report

Small pension pots are costly to deliver and confusing for savers. The industry has been working with the government to find the best way to combine small pots to deliver the best outcomes.

The Department for Work and Pensions (DWP) asked Pensions UK to research the practical and technical feasibility of delivering the Government’s chosen Multiple Default Consolidator (MDC) model, as set out in the Pension Schemes Bill.

The Review follows the work of the Small Pots Coordination Group (convened by Pensions UK and the ABI) and the Government-run Small Pots Delivery Group, which identified the urgency of addressing the proliferation of small pots and the importance of a pragmatic delivery model.

Findings and Recommendations

The Review concludes that a united, industry-delivered model offers a feasible and cost-effective solution for implementing the Small Pots Data Platform by 2030. This is in line with the DWP’s published Roadmap on resolving the issue of small pensions pots.

The proposed model allows schemes and future consolidators to interact directly through agreed data and messaging standards. Rather than building a complex centralised system, the report proposes using existing infrastructure. Delivering this would require strong governance, including with regulators playing their part.

Importantly, costs are expected to remain proportionate, with ongoing industry expenditure estimated to be significantly lower than centralised alternatives, which would impose additional and duplicative costs.

Looking ahead, a second phase of work will be required to refine technical standards, governance arrangements, consumer protections, and implementation phasing, aligned with the passage of secondary legislation.

The Review reflects extensive engagement with schemes across the trust-based, contract-based, and hybrid sectors. DWP, alongside TPR and the FCA, were closely consulted throughout to ensure alignment with existing legislative requirements and the legislative intent of the Pension Schemes Bill.

Zoe Alexander, Executive Director of Policy and Advocacy at Pensions UK, said: “This Review shows that a practical solution to combine millions of small pension pots is within reach — one that delivers value for members, enables schemes to operate effectively, and ensures policy objectives are met. By working together, Government, regulators, and industry can deliver consolidation in a way that is efficient, fair, and beneficial for millions of savers.”

Minister for Pensions Torsten Bell said: “With more small pots than pensioners in the UK, too many people are losing track of their hard-earned savings. This is bad for pensions savers and bad for the pensions system.

“I welcome this report which underlines our commitment to working with industry to fix that. Alongside progress on dashboards, tackling small pots is a crucial step to help millions of people stay connected to their savings and improve their retirement security.”

Colin Clarke, Head of Product Policy Strategy at L&G, said: “Addressing the proliferation of small pots is one of many challenges that the industry faces over the coming years and this report highlights that an efficient, cost-effective solution is possible. L&G are pleased to have contributed to the review and look forward to continuing to work closely with government, regulators and industry to deliver a framework that helps deliver better retirement outcomes for pension savers.”

Philip Brown, Director of Policy and Public Affairs at Nest, said: “We’re proud to have been a sponsor of the Feasibility Study and this report is a strong starting point to fix the small pots problem. We look forward to the next phase of work which will be to tackle the key questions around regulation, governance, and standards, to make sure the system works smoothly and delivers the best outcomes for savers.”

Lizzy Holliday, Director of Public Affairs and Policy at Now:Pensions, said: “This Feasibility Report is an important step forward in showing the multiple default consolidator solution for small pots, as outlined in the Penson Schemes Bill, is possible and practical from a technology point of view. We thank the reviewers for the pace of work and for outlining areas for further development. We look forward to continuing to work with Government and industry in resolving outstanding questions and exploring the implications of the report – including next steps for the critical policy, governance and delivery assessments and decisions that will support a successful implementation.”

Angela Staral, Chief Operating Officer at People’s Partnership, provider of People’s Pension said: “The Small Pots Feasibility Review is an immensely important piece of research, which we are proud to have co-funded. The report shows that the automatic consolidation of small, deferred pension pots is viable. Now it’s time for government and the wider pensions sector to deliver this reform and resolve the small pots problem in the interests of pension savers and their financial wellbeing in retirement.”

Jamie Fiveash, Chief Executive of Smart Pension, said: “We were delighted to take part in this feasibility study. It's important the industry learns from the past to shape the best future for our members. Only by positively embracing change and working collaboratively across industry, and with Government, will we deliver effective solutions that solve real issues for savers.”

Philip Smith, DC Director at TPT Retirement Solutions, said: “This crucial review addresses the worrying proliferation in small pots and the resulting challenge people face when trying to track down their different pensions. Too many workers' pensions are getting lost in the current system, preventing them from building a full picture of their future retirement. The stark reality is that billions remain unclaimed, inactive or simply lost. By setting out a clear plan, industry and government can more effectively collaborate to reduce this fragmentation and empower savers to make informed decisions. We're proud to be a part of the driving force behind this agenda, which could help to put thousands more into the pockets of future pensioners.”

Notes to Editors:

• The Small Pots Feasibility Review was commissioned following the Government’s April 2025 Small Pots Delivery Group Report.
• The Review was led by Pensions UK in collaboration with industry experts Kim Gubler (KGC Associates) and Maurice Titley (Lumera).
• The organisations that co-funded this review include DWP, NEST, TPT Retirement Solutions, People’s Partnership, Legal & General, Now:Pensions and Smart Pension.
• The full review is available to download via the Pensions UK website.

Mark Smith, Head of Media Relations
020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]