Defined Contribution  

Providers set new pension switching time limits

Providers set new pension switching time limits

A group of 10 trade bodies have published a framework on pension switching, which proposes a 14-day maximum limit for cash transactions and 15 days for occupational scheme transfers.

Where there are multiple counterparties, such as schemes with multiple fund managers, it will be appropriate for providers to follow a step-by-step standard in which organisations should take a maximum two full business days for completing each of their own steps in all transfer and re-registration processes.

The Transfers and Reregistration Industry Group (TRIG), created in 2016, aims to improve the customer experience by identifying and encouraging good practice so outlying firms improve their own processes in the defined contribution space.

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The 10 trade associations involved include the Association of British Insurers, the Investment Association, the Pensions & Lifetime Savings Association and the Personal Investment Management & Financial Advice Assocation (Pimfa).

Tom McPhail, head of policy at Hargreaves Lansdown and chairman of TRIG, said: "Completing customers’ instructions to transfer savings and investments between different financial institutions in a fast, predictable and efficient manner can be a huge challenge.

"So, it is to the industry’s credit it has captured a clear framework which can be applied across multiple transactions and counterparties.

"This framework creates a benchmark against which the regulators can assess companies’ commitment to treating their customers in a fair and efficient manner.

"It won’t solve the challenge overnight however it does give the industry a platform on which to build continuing improvements to these complex processes."

Mr McPhail argued that adherence to the framework will not be mandatory at this stage.

He added: "However we do expect regulators and government departments will be looking at which firms have chosen not to adopt the framework."

In the next phase, the industry group will be publishing a register of firms which have committed to the standards.

Guy Opperman, minister for pensions and financial inclusion, recently urged providers to speed up pension switches.

Pension consolidator PensionBee told FTAdviser it will be adhering to the framework.

Clare Reilly, head of corporate development at the firm, said: "PensionBee are very pleased to see end-to-end transfer times as part of TRIG's framework.

"This is a huge step forward for savers, who can finally start to get the same clarity on switching pension provider as they've come to expect across all other industries - that the process should be quick and happen by an agreed date.

"We fully endorse the TRIG framework and publicly commit to working to it. Once the register of firms is published we will be proud to be part of it, as should all other consumer-focused pension providers."

The industry group also published a request for proposal for organisations interested in participating in the ongoing governance of the framework. The deadline for submissions is 31 August.

Rob Yuille, head of retirement policy at the ABI, said: "Looking ahead, we now need to find the most suitable organisation to take on the role of governing the framework, guiding firms to adhere the standards. We look forward to working with whoever is appointed later this year."