Spring Budget 2024: government to pursue ‘pot for life’ pensions reform

Chancellor Jeremy Hunt said he wanted employees to be able to ‘take their pension pots with them’ when they change jobs

Spring Budget: Jeremy Hunt drinks a cup of tea
Spring Budget: Jeremy Hunt has announced pension reforms
(Image credit: Getty Images)

The government will continue to pursue ‘pot for life’ pensions reform, Jeremy Hunt’s Spring Budget has confirmed.

The ‘Pensions Lifetime Provider’ scheme would allow employees to choose which pension pot their employer pays contributions into - a model that’s currently used in Australia. It was first mooted by the Chancellor of the Exchequer in the 2023 Autumn Statement.

Under current auto-enrolment rules, workplaces choose which pension providers their employees’ pots are kept with. While it has significantly increased the number of people who hold a private pension, the existing scheme means workers could accumulate several different pots over the course of their career. Individuals can only take control of their pension pots outside of the workplace by investing in a SIPP.

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The Budget  has received a mixed initial response from industry figures. While some have praised the ambition to give consumers a greater say over their pensions, critics argue the move could be risky, and would require significant work to implement.

What did Spring Budget say about ‘pot for life’ pension reform?

In his Budget speech, Hunt said the ‘pot for life’ would allow workers “to take their pension pots with them when they change job”.

Supporting documents released by the Treasury alongside the Budget stated that the government will “undertake continued analysis and engagement” on the policy. But there has been no mention of when the reforms could be implemented.

Reacting to the announcement, trade body the Pensions and Lifetime Savings Association (PLSA) said it welcomed the government’s decision not to immediately press ahead with its lifetime provider plans. It raised serious concerns about the proposed model.

Its director of policy and advocacy, Nigel Peaple, said; “While some might imagine that elements of the Lifetime Provider model are appealing to savers, PLSA research reveals that over two-thirds (69%) of employees would prefer their employer to choose their workplace pension provider.

“We believe they are right in this assessment as employer involvement helps negotiate down pension costs and enables employees on lower incomes to benefit from the cross-subsidies of being in a group of pension savers at their workplace.”

Peaple urged the government to focus on its value for money regime and “measures like Default Consolidators” before introducing a ‘pot for life’ model. His organisation has previously warned that the UK’s poor financial literacy could mean the model would not deliver value for money for savers.

The PLSA was echoed by the professional body for pensions experts the Pensions Management Institute, which said it was “the wrong time” for Hunt to implement the move. Its director of policy and external affairs, Tim Middleton, said: “We are concerned at the disruption this could cause for so much of the good work achieved to date by automatic enrolment.”

However, some industry figures were more supportive of the scheme. Philip Smith, the defined contribution (DC) director at leading pensions provider TPT Retirement Solutions, said: “The pot for life reforms could be a game-changer in improving retirement outcomes for DC pension savers.

“The changes could provide members with a better opportunity to understand the benefits accumulated through their DC pension pot. Members would find it easier to engage with their pensions, make investment decisions, and monitor how much they have saved for retirement.

“In turn, this could encourage people to increase their contributions, so they are better prepared for retirement. Creating the pot for life system will be a huge operational challenge for schemes and employers. However, we believe that ultimately, the lifetime provider reforms should provide better outcomes for members."

Smith was echoed by David Piltz, CEO of UK benefits and HR division at the consultancy Gallagher, who said the move could “enhance pensions engagement“ should it be ”implemented correctly”.

But Piltz also sounded a note of caution: “We need more clarity on how this will work in practice, given that the proposal requires intensive planning and poses high risks if not implemented well. Careful consideration needs to be taken when building the required infrastructure for the initiative, and the government must not underestimate the magnitude of this job, nor the importance.”

What other pension announcements did Jeremy Hunt make?

The Chancellor announced several pension changes in advance of his Budget speech. These included a push for pension funds to up their investment in UK firms, and the beefing up of the powers held by the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) to ensure funds offer the best returns to their customers.

The Treasury said the government planned to “bring forward” a change that will force DC funds to publicly reveal the breakdown of their assets, including UK equities. The FCA will launch a consultation into investment requirements in the spring.

It also stated that the FCA and TPR would get greater powers to crack down on schemes that focus “on short-term cost savings at the expense of long-term investment outcomes”. It could mean ‘underperforming’ schemes are closed to new entrants or even wound up entirely. Definitions of what good and bad performance looks like are due to be set out in a new value for money framework the government is currently drawing up with the regulators, with a consultation due in the spring.

Investment platform AJ Bell said the greater transparency of scheme performance would be welcome. But, it warned it could lead to unintended consequences. Laith Khalaf, head of investment analysis at AJ Bell, said: “The chancellor’s pension reforms could well backfire on British business. If league tables for pension fund performance were published right now, they would probably show those with high exposure to UK shares languishing near the bottom.

“The poorly performing schemes the chancellor wants to close to new business could very well be the same ones he wants to champion as exemplary models of investment in UK plc. The average insurance company pension fund investing in UK shares has returned 40.7% over the last 10 years, compared to 143.2% from a more global approach. Put another way, a £10,000 investment in a pension fund investing in just UK equities would now be worth £14,071, compared to £24,319 if invested in a global pension fund.”

Henry Sandercock

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV. 


Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years. 


After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.