UK – The Department for Work & Pensions' (DWP) plans for UK pension savings to follow employees to each new occupational scheme are set to exclude defined benefit (DB) funds, it has been confirmed.

Pensions minister Steve Webb, speaking about his plans for the 'pot follows member' approach, said he wanted it to become commonplace for accrued pension rights to move with employees from company to company.

"Instead of having lots of small pension pots all over the place, we want people to have a 'big fat pot' that will buy them a better pension," he said.

In a statement to the House of Commons, the minister added that he hoped the proposals would halve the number of pension pots lying dormant in the wake of auto-enrolment.

The MP added that a framework for the proposals would form part of the forthcoming Pensions Bill, with details provided later through secondary legislation.

The DWP said pots no larger than £10,000 (€11,700) would be subject to the automatic transfer, with a review of the threshold to be conducted at least once every five years.

Additionally, only funds that meet certain minimum quality requirements – a topic recently subject to detailed guidance from the Pensions Regulator – would be allowed to receive pots.

The department said further that transfers would initially only impact money purchase schemes, and that members of DB funds would "not be included at this stage".

The wording of the statement would imply that occupational DB funds could in future be affected by the transfer regulation, a change that would be in line with Webb's defined ambition proposals.

He told a National Association of Pension Funds (NAPF) conference last year that he could envisage a DB system whereby companies would no longer have to fund the guaranteed liability once the employee left.

This is a position the department has since included among its list of potential defined ambition proposals.

The NAPF once again voiced concern that the government had not opted to appoint a limited number of schemes to act as aggregator funds.

Its director of policy, Darren Philp, noted that such an approach would remove the "bureaucracy and expense" for schemes of an automated process each time an employee departed.

Employer lobby group CBI said the consolidation of pots was a "desirable goal", but warned that the detail of the proposals would be important.

Neil Carberry, director of employment and skills, said: "Businesses would have preferred a virtual aggregator to an automatic transfer system.

"This would have been easier to implement and, crucially, avoided the risk of member detriment."

Labour shadow pensions minister Gregg McClymont argued the plans were "vague" and said he remained unconvinced that pots would not be transferred into bad schemes, preferring instead to use the National Employment Savings Trust (NEST) as a central aggregator.

"The only thing that is clear from these proposals is that the government must now lift restrictions on NEST to allow this high-quality, low-cost scheme to offer a safe harbour for small pension pots, and give everyone a chance to save into pensions people can trust."

Manufacturing organsiation EEF echoed concerns that NEST would not be allowed to act as an aggregator fund for smaller pots, which it considered the "most straightforward approach".

Richard Butcher, managing director of Pitmans Trustees, was also critical of the DWP's belief that employing aggregators would not achieve "genuine aggregation".

"Given, however, that the DWP proposals for pot follows members will only apply to pots over £10,000, I can't help thinking that their argument is spurious," he said.

"Aggregators would give us 80% of the big fat pot benefits at 20% of the costs of pot follows member."

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