24th May 2016
The pensions industry should adopt a 7 day switch guarantee for investors transferring from one pension provider to another says Hargreaves Lansdown.
The firm says the pensions industry needs to up its game and develop the next generation of pension transfer systems to benefit consumers. Pension transfer times have come down from an average of around 50 days to less than 2 weeks following initiatives from the pension industry coordinated by Origo – the pensions industry’s e-commerce standards body.
However Hargreaves says that in recent years this progress has stalled. In fact according to Origo, pension transfers between some providers are actually slightly slower today than they were 3 years ago.
Tom McPhail, Head of Retirement Policy for Hargreaves Lansdown: “Pension transfers are far, far faster and more efficient than they were in the bad old days. However there is a risk that this progress is stalling and that consumer confidence could be undermined by uncertainty over how long the process takes. The pensions industry should work together with policymakers to establish a 7 day pension transfer guarantee.”
“Where advice is required, or there are non-standard pension assets, then delays may be appropriate, in part to protect consumers. However, the vast majority of pension transfers are simple transactions, no more complicated than switching a bank account and should take no longer than a week to complete.”
The Pensions industry processes around 400,000 pension transfers every year through the Origo Options system, with transactions worth around £20 billion a year. Average transfer times are around 11 days, however there are significant outliers, for example transfers from occupational pension schemes which do not use Options have an average delay of 39 days (source Origo).
McPhail says that transfer delays mean –