Prudential and Zurich have revealed that they have put in place “contingency plans” to cope with a potential deluge of transfer requests from final salary scheme members seeking to take advantage of pension freedoms in April, when access reforms come into force.
Both companies told FTAdviser they were unsure what to expect in terms of demand, but had put in place plans to ensure resource would be available to cope with any surge and ensure transfer times do not slip.
FTAdviser spoke to a number of providers to gauge expected demand for switches and target transfer times once the decision has been taken to move.
Most firms are uncertain on how many savers would seek to move into money purchase schemes to take advantage of the reforms but were prepared for a sharp uptick. Transfer times were typically around 10 days to two weeks.
Speaking to FTAdviser Adrian Walker, retirement planning expert at Old Mutual Wealth, said that the firm has seen the number of DB pension transfer value requests from financial advisers through its transfer value analysis service triple in recent months.
This could point to a rush of transfers in April, as Mr Walker said the advice process to assess the clients needs, review the cash equivalent transfer value and alternative income options, and decide on whether to proceed would take anywhere up to a month.
He added it can take anywhere from 10 working days to over a month to conduct a transfer once documentation has been completed and received.
Zurich said that its current target for the turnaround of pension transfers for both DB to DC and DC to DC schemes is 10 working days, and that it did not expect to see any increase in the transfer time in the run up to April as it has taken actions early to ensure it is ready.
A spokesperson for the insurer said it has recruited new staff and put in place “a number of contingency plans that will allow us to increase our resource pool, if required”.
Prudential said its current average pension transfer time for DB to DC schemes is 10-15 days. A spokesperson said it would be “difficult” to predict how increased volumes will impact transfer times.
A spokesperson for the firm also told FTAdviser: “It’s difficult to credibly predict how increased volumes may impact transfer times. We are working with our outsource administration partners to ensure that service is maintained. Contingency plans are in place.
“Because of the breadth of our range, average turnaround times will differ depending upon the product and the type of transfer.
“While we have extensive expertise and resource in this area, we will continue to ensure that adequate focus is placed upon both the work resulting from the pensions reform changes and normal workload processes.”
Legal and General said that its current transfer time from receipt of all paperwork for DB to DC transfers is usually two weeks.
A spokesperson for L&G said: “We are not anticipating that an increase in volumes will impact our ability to action these requests within the existing timescales. We are monitoring all activity to ensure we can respond to any significant changes in demand.”