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Fixing the pension transfer problem: new industry-wide initiative

An industry working group, in collaboration with the FCA, DWP and the Pensions Regulator has today published a consultation paper on improving pension and investment transfers for investors who want to move their long term savings around the pension system. The consultation looks at the mechanics of the transfer process, creating service standards and accountability for each of the stages of a transfer transaction across a range of product types and systems.

Tom McPhail, Head of retirement policy:

"Moving pensions and investments around between companies can still be a lottery for investors. Some companies have invested in delivering efficient and predictable service for their customers but others are still bedevilled by turgid, unpredictable and bureaucratic systems. It takes two to tango and it doesn’t matter how good one company’s systems and customer service is, if the counterparty in a transfer transaction is dragging their feet or operating poorly. So it makes sense to address this issue on a collaborative, collective endeavour basis; there is a commitment across the industry trade bodies and organisations involved in this consultation to raise standards across the board."

Hargreaves Lansdown would ultimately like to see an end to end guarantee of no more than 7 days for transferring pensions and investments between investment providers.

The following data shows the extent of the problem faced by investors. It is based on research conducted by Hargreaves Lansdown; each pension provider had completed at least 20 transfers to Hargreaves Lansdown. It shows two principal problem areas; occupational pension schemes and pensions which don’t use electronic transfers.

The Best

Company Type Average days to complete transfer Supports Electronic Transfers
A Insurance company 4.33 Yes
B Wealth Manager 5.94 Yes
C Insurance company 7.07 Yes
D Insurance company 7.43 Yes
E Insurance company 7.53 Yes
F Insurance company 7.71 Yes
G Insurance company 8.19 Yes
H Bank 8.38 Yes
I Insurance company 8.68 Yes
J Insurance company 8.83 Yes

The Worst

Company Type Average days to complete transfer Supports Electronic Transfers
Q Benefits consultancy 34.97 No
R Pension administrator 35.13 No
S Benefits consultancy 35.21 No
T Pension administrator 36.23 No
U Benefits consultancy 39.43 No
V Master Trust 42.03 No
W Benefits consultancy 42.72 No
X Benefits consultancy 44.03 No
Y Pension scheme 45.88 No
Z Benefits consultancy 53.37 No