The Pensions Policy Institute (PPI) has published guidance to support the Department for Work and Pensions (DWP) small pots working group, highlighting the importance of achieving a consensus from all stakeholders before making policy changes.

The PPI stated that it would be “crucial” that any policy approach is supported by all key stakeholders and political parties as a policy change could involve “significant systematic change”.

It warned that this in turn could also potentially see an increase in the costs being levied on providers and employers, and calling on the working group to weigh up the benefits and drawbacks to determine an interim step.

The guidance, Small pots: what they are and why they matter, summarises recent research from the group, which also revealed that the defined contribution (DC) master trust industry is unlikely to break-even until 2025.

It also highlighted key findings from this research, noting that without policy change the number of deferred pots could grow from 8 million to 27 million by 2035.

PPI deputy director, Sarah Luhesi, stated: “We are delighted to be working with the DWP on the launch of their small pots working group.

“This new publication summarises the key conclusions from our successful report 'policy options for tackling the growing number of deferred members with small pots' sponsored by Now Pensions.

“Our report identified the need for change if savers are to receive the full benefits from workplace pensions."

She added: "Change begins with discussions and we are encouraged that these discussions have begun.”

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