Self-invested personal pension (Sipp) providers will have to report whenever they make use of the ‘stop the clock’ exemption offered to them under the Star initiative.
In the first Star working group meeting at the Association of British Insurers (ABI) offices last week (August 22), members agreed increased transparency from providers would make the exemption work.
Sipp providers will be given exemptions on pension switching times due to the nature of the assets they hold, meaning time taken for some parts of the switching process will not count towards the provider's total switching time as set by Star.
This is beneficial to Sipp providers as personal pensions often come with complex assets such as commercial property, which typically take more time to be transferred.
But some advisers are not happy with this exemption arguing that it will allow Sipp providers to cover up the total amount of time a pension switch actually takes.
Tony Nixon, practice principal at T. Nixon Associates, believes stop the clock will allow "some of the worst abuse of position to continue within Sipps".
“To give any Sipp company the excuse of stop the clock is beyond belief,” he said.
But the working group said Sipp providers will need to accurately record and report any stop the clock scenarios.
This should enable consumers to understand why stop the clock was used by a Sipp provider when carrying out a particular pension switch, they agreed.
Matthew Dransfield, commercial and marketing director at Criterion, said: “Several stop the clock scenarios were discussed relevant to particular stages and requirements in the transfer process, along with the need for accurate recording and reporting in those areas.
“The finer detail will be defined by the group during the process of determining good practice and will require the approval from the Star steering group.”
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.
So far, 46 companies have committed their support to the pensions switching platform, surpassing the original target of 30 signatories.
Of these 46 companies 45 delegates attended the first Star working group on pensions, which mainly focused on personal pensions and Sipps which tend to be more complex in nature.
Sipp providers AJ Bell, James Hay and Barnett Waddingham have all signed up to Star, as well as pension providers Aviva, Aegon and government-backed scheme Nest.
It is not known when the next working group meeting will be held.
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