Defined Contribution  

Pension providers named and shamed over transfers

Pension providers named and shamed over transfers

Moving a pension from one provider to the other can take as long as 52 days or be as fast as 13 days, with times varying widely between providers, pension consolidator PensionBee has found.

In its analysis of the pension switching market - which involves moving defined contribution (DC) pots between providers - the firm found XPS Pensions Group (formerly Xafinity) was the provider with the worst switching time, taking an average of 52 days to release the funds.

The fintech provider published its Robin Hood index, which analyses switching times, average annual charges and exit fees from 35 UK DC providers, today (1 August).

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It analysed a sample of 7,292 transfers to its platform to find the worst performers – with Now: Pensions in second place taking 45 days on average, followed by Mercer, with 44 days.

On the more positive side, the best performers were Aviva, Scottish Widows, B&CE, Canada Life and Phoenix Life, who all managed to conduct these transactions in less than two weeks on average.

Romi Savova, chief executive of PensionBee, said: "Things are definitely changing for the better in the pension industry, but a lot of work remains to improve switching times and completely eliminate all forms of exit fees.

"There are a handful of providers who continue to treat customers unfairly and we are determined to stay at the forefront of customers’ rights to have better pensions and ultimately a decent retirement."

But Paul Cuff, co-chief executive at XPS Pensions, questioned the validity of the data, saying PensionBee had only analysed six individual pension switches, "each with its own characteristics".

He said: "Around half of the time between initial contact and the transfer being paid the process was out of our hands – for example, members choosing what to do once in receipt of a quote. 

"We are dedicated to improving member outcomes and are supportive of what PensionsBee are trying to achieve in terms of raising standards, but care needs to be taken on research like this when the sample size for our firm is so small."

Position

Provider

Average pension switching time

1

XPS Pensions Group

52 days

2

Now: Pensions

45 days

3

Mercer

44 days

4

Willis Towers Watson

41 days

5

Aon Hewitt

41 days

PensionBee declined to disclose how many cases it had analysed relating to each provider but guaranteed each individual firm had a sample of at least five cases.

Mercer and Willis Towers Watson also criticised the consolidator's index, saying it doesn't compare providers like-for-like, or provide an accurate assessment of the market.

A spokesperson at Mercer said: "Without understanding the samples used, the research may not be comparing apples to apples.

"It is interesting and, we think, pertinent to note that in this research, the slowest are third-party administrators of predominantly trust-based occupational pension schemes, while the fastest are insurers of predominantly individual pension policies.

"There is a crucial difference there. The duty of care that trustees and their administrators have to their members is different to an insurer’s to its policyholders. 

"For trust-based occupational pension schemes there are specific considerations to take into account, and processes that must be followed, to ensure transfers are settled appropriately."