16 February 2025, 06:30 | Updated: 17 February 2025, 09:36

By EJ Ward

A new report from the Institute for Fiscal Studies (IFS) has brought renewed attention to the issue of small pension pots, highlighting the challenges they pose for savers and the broader pensions industry.

Urgent reform is needed to ensure individuals can manage their retirement savings more effectively.

The IFS report identifies small ‘deferred’ pension pots as a major issue in the UK’s pension landscape. Nearly 20 million defined contribution (DC) pension pots worth under £10,000 are no longer being contributed to, with 12.1 million of these containing less than £1,000 (‘micro pots’). Such fragmentation complicates retirement planning for savers and increases administrative costs across the pensions industry.

This growing issue not only creates unnecessary complexity for individuals but also results in higher costs across the pensions sector and for consumers. With millions of small........

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