The Business Case For Employer Supported Pension Portability

For too long, the pension system in the UK has accepted inefficiency as inevitable. Every job change triggers the creation of yet another pension pot, forcing employees to juggle multiple accounts, employers to manage unnecessary administrative complexity, and providers to lose valuable inflows and engagement. Yet, none of this friction is a requirement of regulation. It is a symptom of how disconnected the ecosystem has become. Pension portability changes that.

At its core, portability enables employees to keep contributing to their existing pension when they change jobs. A simple connector model allows employers to route contributions directly to an employee’s chosen pension, all within existing payroll and compliance frameworks. The result is not a new product or a replacement for workplace pensions, but a better connection between the systems that already exist.

The Institute for Fiscal Studies (IFS) confirms there are 12 million+ pension pots with a value of under £1,000.

Measurable value for employers

Employers are under increasing pressure to demonstrate that their benefits strategy supports financial wellbeing. Portability allows them to do so without adding cost, complexity, or risk.

By giving employees a choice for their contributions to go to an existing pension, employers can:

• Strengthen their financial wellbeing offering and stand out in recruitment and retention.

• Reduce employee disengagement caused by scattered pensions.

• Simplify their administrative burden by connecting once to a compliant, automated model rather than managing multiple pensions at a time.

  
  

Whilst auto-enrolment remains the foundation, flexibility has become the differentiator. In a competitive market, small gestures that respect individual choice can have a big impact on employee satisfaction and loyalty.

Commercial opportunity for providers

For providers, the business case is equally strong. Every time a member changes jobs, providers lose visibility and contributions. Portability creates a compliant mechanism to retain those inflows and maintain lifetime relationships. This delivers:

• Stronger asset retention and predictable growth.

• Better engagement data and improved Consumer Duty reporting.

• Access to new inflows through employer connectivity that was previously unavailable.

• Lower acquisition and transfer costs by reducing member churn.

The connector model allows providers to participate in workplace contributions without needing to become the employee’s workplace pension provider. It levels the playing field, ensuring that Pension providers can compete fairly whilst maintaining regulatory integrity.According to the Pensions Policy Institute, there are now 3.3 million lost pension pots holding a combined £31.1 billion in unclaimed assets. 

No added cost. 

The key to making pension portability work lies in simplicity. Employers and providers already have the systems needed to handle payroll deductions and contribution routing. By introducing a single, compliant connector between them, employers benefit without additional cost or disruption.

Employees gain control and continuity. Employers enhance their benefits proposition. Providers retain assets and engagement. The system as a whole becomes more efficient, more transparent, and more aligned with the outcomes regulators and consumers expect.

Pension portability is not a future ambition. It is a practical, ready-to-implement solution that aligns with existing regulation and technology. As the workforce becomes more mobile and employees expect flexibility in every other aspect of their financial lives, the business case for connecting pensions through a simple, compliant model becomes clear.

Whilst the industry debates long-term reform, portability offers a near-term, measurable step forward. It delivers fairness, choice, and efficiency for all stakeholders, without asking employees and employers to pay more or compromise on compliance.

It is time to make the pension system work as flexibly as the people it serves.