A federated, open standards approach to low-cost, scalable consolidation, built on the infrastructure the UK pensions industry already uses.
"With more small pots than pensioners in the UK, too many people are losing track of their hard-earned savings. This is bad for pension savers and bad for the pensions system."
Torsten Bell, Pensions Minister
Over 13 million deferred small pots already exist in the UK DC market, costing the industry an estimated £225 million a year in unnecessary administration. Without coordinated action, that number will reach 17.5 million by 2030, to the detriment of member outcomes and increasing operational burden across the market.
The Pension Schemes Bill has set the direction. But with detailed requirements still evolving, the risk of committing to the wrong approach is real. Schemes need a consolidation model that is cost-proportionate, future-proof, and deliverable before 2030.
Equisoft's new whitepaper makes the case for a standards-based, federated model that’s open to anybody, one that builds on SWIFT, ISO 20022, TeX, UKETRG, and ViaNova rather than creating new centralised infrastructure. Download it today.
Dive into the practical guidance your team can act on today in this whitepaper. Download the whitepaper
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The small pots problem by the numbers #
- 13M+ deferred small pots in the UK (2024)
- £330 average value of a pot under £1,000
- £225M annual admin cost to the industry
Key positions in the whitepaper #
- The full scale of the small pots problem, current figures, projections to 2030, and operational implications for schemes and consolidators
- How to act ahead of full legislative certainty without committing to approaches that may require rework
- What the step-by-step process looks like: consolidator enquiry, matching, carousel distribution, transfer, and audit reporting
- Detailed cost modelling from one-off setup through to per-pot operational costs at scale
- How a new governance model could work: roles for DWP, TeX, ViaNova, UKETRG, consolidators, and ceding schemes
- Proposed SLAs and a roadmap for coordinated industry action ahead of 2030
The small pots solution #
A federated model built on what already works
Government-led centralised solutions can be expensive and take decades to deliver; proprietary solutions may not be cost appropriate and may not align with government direction. Equisoft's whitepaper sets out a standards-based, federated approach that leverages what the UK pensions industry has already built.
Using ISO 20022 messaging over SWIFT, already operating at scale across pensions fund trading as well as ISA, GIA, and pension transfers, and the legal and governance framework provided by TeX, this model enables consolidation without a new central database, a single controlling entity, or vendor lock-in.
The federated model delivers:
- No new infrastructure: builds on SWIFT (45M+ daily messages), ISO 20022, TeX, and ViaNova
- Proportionate costs: per-pot transfer costs less than a pound at scale
- Fair allocation: carousel distribution achieves near-perfect proportional spread across ~300 ceding schemes
- Future-proofing: adaptable as Pension Schemes Bill requirements are finalised
- A plan that is actionable now: initial implementations measurable in months, not years — well ahead of the 2030 government target