The Pension Schemes Bill published on 5 June 2025 provides the legal framework to ensure that small dormant pension pots held by auto-enrolment schemes are transferred into “consolidator schemes”.  A “small” pot will broadly be a pot with a value of £1000 or less (subject to a power for the government to alter the figure following consultation).

A pension pot will be deemed “dormant” if:

• no contributions have been paid to it in the preceding 12 month period; and
• the member has taken no steps to confirm or alter the way the pot is invested.  (This is subject to a power for the government to prescribe exceptions via regulations.)

A “small pots data platform operator” (SPDPO) will be established.  The SPDPO will notify the scheme holding a small pot of the SPDPO’s default proposal for it to be held by a consolidator scheme.

The provisions in the Bill set out a broad framework only, with the detail to be fleshed out by regulations.  A scheme holding an in scope small pot will be obliged to send the member a “transfer notice” informing the member that, if the member does not respond, the pot will be transferred in accordance with the default proposal.  The member will have the right to opt for an alternative proposal or require the pot to be left where it is.  A requirement to transfer a pot under the consolidation regime will override a contrary provision in the scheme’s governing documentation.

The Bill provides that a consolidator may be a master trust authorised as a consolidator by the Pensions Regulator or a group personal pension scheme authorised as a consolidator by the FCA.  Further legislation will establish the legal framework for the authorisation of schemes as consolidators.

Alongside the Bill the Government published a “roadmap” with indicative timescales for bringing the various provisions into force.  The roadmap indicates that the regulations fleshing out the small pots regime will be made in 2027/28, consolidators will be selected in 2029, and the transfers duties will come into force in 2030.

Our thoughts

The implementation timescale of 2030 is beyond the date of the next General Election.  However, earlier consultation on small pots consolidation took place under the previous government, so we would not assume that a change of government would necessarily result in a change of policy in this area.

The member data to be used for the purposes of consolidation has not yet been determined, but the Government’s Small Pots Delivery Group has suggested that the primary data set needed will be the member’s first name, surname, date of birth and NI number, and that where possible schemes should provide the supplementary data set of mobile number, e-mail address and previous addresses and postcodes.  It would therefore be sensible for scheme operators to consider at this stage whether they hold this data for existing members.