Member

Finally, I turn to Amendment 88 from the noble Baroness, Lady Noakes, which would cap the definition of “small” pension pots at £10,000. I understand the argument behind this amendment, which aims to provide certainty and prevent scope creep. However, the Government are not persuaded that it is sensible to hardwire the cap in primary legislation. Clause 34 aims to ensure that the small pots consolidation framework remains effective and relevant over time. Flexibility matters because the current starting point for automatic consolidation is £1,000. The starting threshold was chosen carefully to balance simplicity with member protection. However, over time, inflation, wage growth and changes in saving behaviour may render this figure obsolete. If we lock in a £10,000 cap now, we risk constraining the ability of Governments now and in future to respond to evidence-based need. I should say clearly that the Government have no intention of adjusting the threshold value without robust analysis, supported by the evidence, and without the necessary safeguards being in place to ensure that this does not happen.