DWP launches consultation on implementing small pots default consolidator solution

The consultation – Small Pots: a pathway for consolidation – follows the Pension Schemes Act 2026, which gave the government the power to introduce a multiple default consolidator solution.

Commenting on the consultation, pensions minister Torsten Bell said: "Across the workplace pensions market today, there are around 13 million deferred small pension pots – and that number is growing by more than a million every year. This proliferation of pots is not just a trend; it's a structural inefficiency. We estimate it costs the industry £240m annually in administration – costs that ultimately fall on members.

"That runs counter to what we want from this market: a system that delivers value for money, the benefits of scale provision and secure retirement incomes for the vast majority of savers. That is a system that builds trust and confidence, removing current complexity and waste of fragmented small pots."

Bell said the multiple default consolidator approach would allow eligible small pots to be brought together automatically, without any action from members – a move he said would result in fewer, larger pots that are easier to manage, and a system freed from unnecessary cost and wasted administration.

He added: "This consultation sets out the building blocks of the policy, from how consolidator schemes will be authorised, to the digital infrastructure that will underpin the model. These are big decisions, and they must be taken with one principle at their heart: what is best for members.

"Our ambition is clear: to have small pot consolidation operational from 2030. This is a reform built for the long term, and we want to hear your views on how to make this work in practice – your insights will be vital in shaping a system that delivers for members and the industry."

The consultation will run for nine weeks, ending on 17 November 2026.