A united, industry-delivered model offers a feasible and cost-effective solution for implementing the Small Pots Data Platform by 2030, Pensions UK's Small Pots Feasibility Review has found.

The review, which was highlighted as a "significant milestone" in the industry's partnership with government to tackle the growing issue of small pots, builds on the work of the Small Pots Coordination Group and the government-run Small Pots Delivery Group, which identified the urgency of addressing the proliferation of small pots.

Although the review found that small pension pots are currently costly to deliver and confusing for savers, it suggested that the government's plans to use a multiple default consolidator model, as outlined in the Pension Schemes Bill, are feasible.

In particular, the review concluded that a united, industry-delivered model offers a feasible and cost-effective solution for implementing the Small Pots Data Platform by 2030, which is in line with the DWP’s published Roadmap on resolving the issue of small pensions pots.

The review suggested that the proposed model would allow schemes and future consolidators to interact directly through agreed data and messaging standards.

Rather than building a complex centralised system, the report suggested that the platform should make use of existing infrastructure, although it admitted that delivering this would require strong governance, including with regulators playing their part.

Pensions UK also found that, importantly, costs are expected to remain proportionate, with ongoing industry expenditure estimated to be significantly lower than centralised alternatives, which would impose additional and duplicative costs.

However, the review suggested that a second phase of work will be required to refine technical standards, governance arrangements, consumer protections, and implementation phasing, aligned with the passage of secondary legislation.

Commenting on the report, Pensions UK executive director of policy and advocacy, Zoe Alexander, said: “This review shows that a practical solution to combine millions of small pension pots is within reach — one that delivers value for members, enables schemes to operate effectively, and ensures policy objectives are met.

"By working together, government, regulators, and industry can deliver consolidation in a way that is efficient, fair, and beneficial for millions of savers.”

Adding to this, Pensions Minister, Torsten Bell, said: “With more small pots than pensioners in the UK, too many people are losing track of their hard-earned savings. This is bad for pensions savers and bad for the pensions system.

“I welcome this report which underlines our commitment to working with industry to fix that. Alongside progress on dashboards, tackling small pots is a crucial step to help millions of people stay connected to their savings and improve their retirement security.”

The review has also had backing from the wider industry, as L&G head of product policy strategy, Colin Clarke, agreed that addressing the proliferation of small pots is one of many challenges that the industry faces over the coming years, with the report demonstrating that an efficient, cost-effective solution is possible.

Now Pensions director of public affairs and policy, Lizzy Holliday, also highlighted the report as an "important step forward" in showing the multiple default consolidator solution for small pots is possible and practical from a technology point of view, while People's Partnership chief operating officer, Angela Staral highlighted it as an "immensely important piece of research".

Adding to this,  Nest director of policy and public affairs, Phillip Brown, said: “We’re proud to have been a sponsor of the Feasibility Study and this report is a strong starting point to fix the small pots problem.

"We look forward to the next phase of work which will be to tackle the key questions around regulation, governance, and standards, to make sure the system works smoothly and delivers the best outcomes for savers.” 

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