Those paying into a pension through auto-enrolment at work may be in danger of losing their retirement savings if the trusts employers are placing the cash in collapse, the work and pensions select committee has said in a new report published today.
While auto-enrolment has been a success, it warned: “Gaps in pension law and regulation have allowed potentially unstable master trusts on to the market. Should one of these trusts collapse, there is a very real danger that ordinary scheme members could lose retirement savings.”
The group is calling on the government to give the pensions regulator greater powers to ensure schemes adhere to a minimum standard in terms of finances and governance.
The committees’ report also also raised concerns that employees may be encouraged to opt for the chancellor’s new Lifetime Isa (Lisa) rather than auto-enrolment. “Whatever the attractions of the Lisa, it must not be presented as a direct alternative to AE,” the committee said.
A spokesperson for the department for work and pensions said it would consider the recommendations and respond in due course.
