MILLIONS of workers will be able to choose to build up a pension “pot for life” under radical new plans.
Employees will be able to nominate the retirement scheme they want employers to pay into, Chancellor Jeremy Hunt is expected to announce.
Companies are currently obliged to sign up staff to their own pension plans chosen by them.
But this has led to workers often having several different pensions as they switch jobs meaning tens of millions of pots in the system.
Having a single pension pot system has been adopted by countries including Australia.
A Treasury insider told FT.com: “British workers deserve to get the most out of their pensions, so we will make it easier for employees to keep track of their hard-earned savings.
“Helping people keep the same pension pot will stop billions of pounds being needlessly lost and make sure tomorrow’s pensioners benefit from every penny they save.”
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The Treasury will outline the plans in a call for evidence.
But Steve Webb, ex-Pensions Minister, said: “I think this is a terrible idea. It could lead to a fragmentation of the pension system.
“Lower earners risk being left worse off if they can no longer access a good value workplace pension.”
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Mr Hunt has also earmarked a new growth fund as part of the British Business Bank which will channel pension funds into start-up companies.
He told the CBI conference that he would “unlock business investment and close the gap with countries like France, Germany and the US”.
The pension changes come as Jeremy Hunt reveals his “pathway” to lower taxes for millions of Brits.
He has said the British economy has “turned a corner” with business set to reap the rewards with tax cuts.
He is likely to cut national insurance and then wait before making a decision on cutting income tax in a pre-election budget next year.
Mr Hunt has called this event the “Autumn Budget for growth”.
He will also launch a major clampdown on benefit claimants to cut the welfare bill.
Those who “coast” on benefits will lose handouts – including free prescriptions – if they don’t take a job.
He will also attempt to up the number of those working from home even if they have mobility or mental health issues.
The state pension is set to go up in line with the earnings figure of 8.5 per cent and benefits will be up-rated by 6.7 per cent.