Sipp providers unlikely to meet pension switching deadlines

Sipp providers unlikely to meet pension switching deadlines

Dentons Pensions has warned self-invested personal pension (Sipp) providers could fail the new standards for pension switching announced last week.

The Transfers and Re-registration Industry Group (TRIG), made up of 10 trade bodies, published a framework 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.

Martin Tilley, director of technical services at Dentons, welcomed the publication of the framework, but argued that it doesn’t consider the specificities of the Sipp market, and makes no reference to transfers to small self-administered schemes (Ssas).

He told FTAdviser that requesting the registered status of a scheme from HM Revenue & Customs (HMRC), for a scam check for example, can take upwards of 15 working days already.

He said: “These transfers will miss the deadlines [of the framework] and whilst we can record good reasons why they do, firms that undertake a higher proportion of these transfers (full Sipp providers for example) will have a higher proportion missing the deadlines.”

Also, if a transfer between Sipps involves physical property it will also increase the timescale of the process.

Property in a Sipp is typically held as an asset of the scheme, and if it is re-registered to a new scheme, it is treated as a sale and requires an independent valuation, and involvement of the lender if there is any borrowing against the property.

Mr Tilley argued that if TRIG publishes data on the performance of providers without explanation this can "have a detrimental impact to these firms," and the trade bodies should provide “some clarity around the collection and use of this data”.

Tom McPhail, head of policy at Hargreaves Lansdown and chairman of TRIG, said that Mr Tilley has legitimate concerns.

He said: "Where a firm has a high level of non-standard transactions which cause delays I would expect that to be recognised in any analysis of their performance against the framework standards."

He noted, however, that the way the data will be published to the market has yet to be defined, and that it will be developed with the establishment of the ongoing governance regime of the platform.

This will be devolved after the industry group chooses a firm to provide this service.

TRIG published a request for proposal for organisations interested in participating in the ongoing governance of the framework, with a deadline for submissions of 31 August.

Created in 2016, TRIG aims to improve the customer experience by identifying and encouraging good practice so outlying firms improve their own processes in the defined contribution space.

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).