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Advice firm ranks providers' pension switching delays

Advice firm ranks providers' pension switching delays

Retirement income adviser My Pension Expert has revealed the worst and best providers when it comes to release their clients’ funds in pension switching processes.

According to the Retirement Fairness Index, which is based on analysis of the firm’s own customer cases between October 2017 to March 2018, Mercer is the worst offender, taking 113 days to release funds to clients looking to switch retirement income providers.

On the other side of the list is Sanlam, which takes just 28 days to release funds.  

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My Pension Expert has calculated that the Mercer’s delay is costing its clients £889.95.

The provider has been approached for comment.

My Pension Expert’s Index is based on data from 973 clients - 17 of which were Mercer customers.

It uses an average fund size (net of the tax free lump sum) of £49,968 producing an average annual income of £3,823 and a daily income of £10.47.

The data is based on the time taken to transfer from a ceding scheme to a new provider. The start point is the date the signed pack from the client is received by My Pension Expert's office, with the advice firm sending a letter of authority to the provider within 24 hours.

Industry regulations make it impossible to release pension funds immediately.

But long delays by providers undermine the Financial Conduct Authority's (FCA) drive to encourage consumers to shop around with all the available companies for the best deal, the advice firm said.

The regulator said, in its interim findings of the Retirement Outcomes Review, published in July, that it was considering intervening in the pensions market to make it easier for customers to shop around for drawdown products.

A spokesperson for Mercer criticised My Pension Expert's findings claiming the league table does not provide "an accurate reflection of Mercer’s performance compared to our peers".  

"Given that Mercer’s workload is dominated by transfers out of occupational pension schemes rather than other types of arrangement, there are specific considerations to take into account, and processes that must be followed, to ensure transfers are settled appropriately.

"A survey based on just 17 of over 5,578 transfers administered by Mercer over the period of the research does not allow for meaningful comparisons to be made.“

However, Mercer is not the only company to delay pension switching processes.

Reliance Mutual take 95 days to release funds, whilst Capita takes 78; such delays cost customers £701.49 and £523.50 respectively, according to the research.

Provider

Q4 2017

Q1 2018

Average days 

Average days minus 28

 Cost to customer per provider 

Sanlam

37

20

28

0

 £0

NFU Mutual

0

29

29

1

£10.47 

Reassure

27

40

33

5

£52.35 

Prudential

44

21

33

5

£52.35 

Canada Life

49

20

34

6

£62.82 

Legal & General

51

24

37

9

£94.23 

Phoenix

44

30

37

9

£94.23 

Sun Life Financial of Canada 

26

50

38

10

£104.70 

Hargreaves Lansdown

44

37

40

12

£125.64 

B&CE

54

29

42

14

£146.58 

Scottish Widows

55

32

43

15

£157.05 

Standard Life

51

38

44

16

£167.52 

Clerical Medical

53

36

44

16

£167.52 

Halifax

0

44

44

16

£167.52 

Friends Life 

43

47

45

17

£177.99

Black Rock 

54

36

45

17

£177.99 

Abbey Life

49

41

45

17

£177.99 

Wesleyan

47

0

47

19

£198.93 

Old Mutual Wealth

66

34

50

22

£230.34 

Aviva

59

41

50

22

£230.34 

Aegon

58

44

51

23

£240.81 

Royal London

61

50

55

27

£282.69 

Liverpool Victoria

58

58

58

30

£314.10 

Virgin

63

56

59

31

£324.57 

Zurich

72

47

59

31

£324.57 

Just Retirement 

74

49

62

34

£355.98 

Fidelity

78

52

65

37

£387.39 

Equitable Life

79

58

68

40

£418.80 

Met Life

69

0

69

41

£429.27 

Towers Watson

67

70

69

41

£429.27 

Countrywide Assured

76

0

76

48

£502.56 

Capita

70

86

78

50

£523.50 

Reliance Mutual 

95

0

95

67

£701.49

Mercer

113

0

113

85

£889.95 

The advice firm will start publishing the index quarterly, hoping that it “will prompt monitoring bodies to take decisive action against unfair ceding company policies”.

According to Andrew Megson, executive chairman of My Pension Expert, “these delays in releasing funds to consumers are simply not acceptable”.

He said: “The monies caused by the delays can never be recovered. It’s hard to believe such practices have gone unchallenged for so long. 

“As shocking as My Pension Expert’s research is, it acts as a much needed wake up call to the sector. We intend to continue monitoring ceding companies and hold them to account.