Self-invested personal pension (Sipp) providers will be among the providers given exemptions on pension switching times due to the nature of the assets they hold.
The exemptions will mean time taken for some parts of the pension switching process will not count towards the providers' total switching time as set by Star, a new industry initiative which sets time limits for transfers between pension schemes.
This is especially beneficial to Sipp providers as personal pensions often come with complex assets such as commercial property, which typically take more time to be transferred.
The Star initiative was formed in October as a partnership between Criterion and TeX which works on delivering the Transfers and Re-registration Industry Group framework and proposed a 14-day maximum limit for cash transactions and 15 days for occupational scheme transfers.
A Criterion spokesperson told FTAdviser the Trig framework also allowed for such “stop the clock” events. However the specific requirements of the Star initiative and how these stop the clock events will work is yet to be established.
The spokesperson said: “The Trig framework does allow for stop the clock events, and we’ll work with stakeholders to ensure that they are defined to reflect real non-business as usual scenarios that can reasonably have an impact on a transfer.
“There is an appreciation that for more complex cases involving, for example, commercial property, the process will be longer with the potential for stop the clock events and this is something that the working group will help determine.”
Criterion said work to define these standards will begin this week and will take into account the complex nature of Sipps.
The spokesperson said: “With broad industry representation we are confident that issues that are maybe specific to Sipp providers will get surfaced and fully understood in the context of what Star is setting out to achieve.”
The clarification came after Sipp providers AJ Bell, James Hay and Barnett Waddingham signed up to Star.
Tom Selby, senior analyst at AJ Bell, said: “We’ve signed up to the Star initiative because we believe switching times between platforms and pension providers need to improve.
“Switching between accounts in many other parts of the financial services industry is now quick and easy and that should be the objective for Isas and pensions too.”
He added: “We believe all pension and platform providers should sign up to the Star initiative because ultimately its success will be dependent on a critical mass of providers committing to the standards that are agreed.
“A transfer can only be as quick as the weakest link in the chain so the more providers sign up to the initiative the better the outcome will be for customers and their advisers.”
FTAdviser reported last week (August 16) that the government-backed workplace pension scheme Nest, which administers 8m pension pots, also signed up to the Star initiative.
So far, 46 companies have committed their support to the pensions switching platform, surpassing the original target of 30 signatories.