Defined Contribution  

Pension switching takes up to 60 days at worst firms

Pension switching takes up to 60 days at worst firms

Mercer and Now: Pensions are the worst performers when it comes to pension switching times, data from consolidator PensionBee has shown.

The administrator and workplace pension provider took 62 and 61 days respectively on average to process a request to move a pension from one defined contribution scheme to another.

PensionBee’s analysis looked at 51,503 transfers conducted between 2016-19, with the sample size for each provider ranging from 141 to 7,914 transactions.

Adrian Boulding, director of policy at Now: Pensions, said: "The extended period that PensionBee has used for their average includes the period of administrative difficulties that we experienced in 2017, which are now resolved. This has created an artificially poor number for us.

"We were among the first occupational pension schemes to join the Origo on-line platform (in July 2017) in order to try speed-up transfers. We have also now joined the Trig Star group, that is helping define best practice industry standards for pension transfers, which will improve times for customers going forwards."

A spokesperson at Mercer said: "Mercer is signed up to the Star and Origo programmes and is committed to continuous improvement in our pensions administration service."

On the other hand of the spectrum was Aviva, the best performing provider, with an average pension switching time of 12 days.

Across the 25 companies analysed the average switching process took 20 days.

Provider

Average time (days)

Mercer

62

Now: Pensions

61

Capita

45

Towers Watson

42

Smart Pension

36

JLT

33

Hargreaves Lansdown

32

Nest Pensions

25

Zurich

24

Virgin

23

Prudential

20

Royal London

20

Old Mutual Wealth

19

Sun Life Financial of Canada

19

Aegon

19

Phoenix Life

19

Standard Life

18

Legal & General

18

B&CE (The People's Pension)

18

Clerical Medical

17

Fidelity

16

ReAssure

16

Scottish Widows

13

Aviva

12

Overall average

20

PensionBee’s data is different from the figures released quarterly by Origo – which showed Hargreaves Lansdown as the worst performer – because the consolidator's sample includes transactions conducted outside of Origo Options for providers that do not use electronic transfers.

Romi Savova, chief executive at PensionBee, said: “This pension switching data of over 50,000 transfers illustrates that consumers continue to face outlandish delays in moving their pension money.

“Auto-enrolment and job hopping is now a staple of the modern labour market and the state expects consumers to take control of their own pension savings.

"This will become increasingly difficult if the government insists on maintaining legislation from 1993, which has created a transfer time lottery.

“It is unbelievable that some providers take over 60 days on average to complete routine transfers that can be done in under two weeks. A pension switching guarantee is now long overdue.”

Several providers have committed to join pension switching initiative Star, launched in October 2018, which is working on improving the standards of transfers between defined contribution schemes.

It is 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.

Guy Opperman, minister for Pensions and Financial Inclusion, has pledged to publicly name providers who do not sign up to the initiative.

maria.espadinha@ft.com

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