'Risky' new scheme could hurt workers

The "pot-follows-member" scheme is a bid to reduce the number of dormant pension pots.

But National Association of Pension Funds chief executive Joanne Segars, TUC general secretary Brendan Barber (pictured), Age UK director Michelle Mitchell and Which? chief executive Peter Vicary-Smith warned in a letter to the Daily Telegraph today that it is potentially risky.

They said it could see money being transferred from good schemes with low fees to naff schemes with high fees, meaning that workers wouldn't get the best deal when they retire.

Separately, the National Pensioners Convention (NPC) warned today that ministers are set to nick a fiver every year from each of Britain's pensioners.

Switching the rate of inflation used when increasing the state pension from the Retail Price index (RPI), which includes things such as mortgage payments, to the Consumer Price index (CPI) is set to cost £5.20 a year.

The Office of National Statistics said today that the CPI for September was 2.2 per cent, while RPI was higher at 2.6 per cent.

These figures will be used when pensions are increased next April.

But new rules state that they will go up by the highest out of CPI, average wage increases or 2.5 per cent.

The NPC told the Morning Star: "As a result, next year's state pension will rise by £2.70 a week - rather than the £2.80 which would apply under RPI.

"Over the course of the year a pensioner with a full basic state pension will miss out on £5.20. For millions of older women who don't qualify for a full state pension the situation is even worse.

"Their increase will be just £1.60 a week.

"In addition, the state second pension and millions of public-sector pensions won't even rise by the 2.5 per cent - but by the CPI figure of 2.2 per cent."