With high volumes of pension transfers expected between employers’ schemes on the back of auto-enrolment, an industry-wide pension transfer service is needed, Paul Pettitt has said.
The 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 high volume of transfers and do so on a cost-sensitive basis over the long term.”
The Department for Work and Pensions has proposed a new system whereby members’ pension pots would follow them automatically from one job to another. This would help members keep track of their pension savings, and lessen the impact of charges.
The Edinburgh-based services body for the financial industry has highlighted a set of key requirements needed to develop and maintain an industry-wide ‘pot follows member’ transfer service to continue to improve the efficiency of the transfers.
Mr Pettitt said the service must be open to all schemes and providers, must swiftly and safely process the transfers customers will need each month, and must provide good value for schemes and providers.
The service must also invest in its development and stability to future-proof it for the whole industry.
Mr Pettitt said that with auto-enrolment rolling out to small businesses, and the volume of pension pots that will be transferred between employers’ schemes, proven efficiencies and the ability to control long-term costs need to be at the heart of the service.
Adviser View
Steve Danson, financial planner at Lancashire-based Banks Wealth Management, said: “This sounds like a very useful service the industry needs. Currently when an employee moves jobs and wants to consider transferring his pension, the process is long and convoluted, and is not handled efficiently. An industry-wide service would simplify this process.”
