Origo has announced four key requirements needed to develop an industry-wide pot follows member transfer service for pension transfers to be successful.
The Department for Work and Pensions plans to introduce automatic transfers of small workplace pension pots of less than £10,000 when members move jobs. The ‘pot follows member’ scheme, designed to augment its auto-enrolment roll-out, will be implemented next year.
Origo noted that the with auto-enrolment currently in the initial stages of rolling out to smaller businesses, the volume of pension pots that will need to be transferred between employers’ schemes “is likely to increase exponentially.”
Paul Pettitt, managing director of Origo said: “For the DWP’s preferred federated model of delivery to work effectively, these transfers need to be carried out by trusted, efficient operators who can both manage the potentially very high volume of transfers and who can do so on a cost sensitive basis over the long term.”
Origo has highlighted four key requirements needed to develop an industry-wide pot follows member transfer service that “can maintain and continue to improve the efficiency of these pension transfers.”
The service must:
• Be open to all pension schemes and providers, with appropriate due diligence carried out on all organisations wishing to join the service;
• Swiftly and safely process the tens of thousands of pension transfers that customers will require each month;
• Consistently provide good value for pension schemes and providers to enable them to lower their processing costs; and
• Continue to invest in the development and stability of the service to future proof it for the whole industry.
Earlier this month, Altus called for ‘open standards’ across the board for electronic pension transfers, arguing the model is much more aligned with other standards and government thinking, while other firms have the ‘if it ain’t broke don’t fix it’ mentality.
Ben Cocks, director at Altus, said it is particularly relevant now in light of the new legislation allowed by the ‘pot follows member’ rules which will be implemented next year.
At that time, Mr Cocks said: “Open standards means that multiple solutions can then operate.
“The alternatives are having a single monopoly supplier – in this case there is no leverage over costs so it is typically expensive. The other alternative is having multiple incompatible solutions.
“Open standards and an open market solution is important because it means we can contain costs. The benefits would be lower costs, maximum coverage and maximum efficiency.”