Providers’ pension switching times increased by merely half a day despite them having to navigate the challenges of Covid-19 and lockdown, according to Origo.
The fintech company published data last week (July 15) detailing how long pension providers took to process a pension switching request on average for the 12 months to June 30, 2020.
It found that overall switching times increased by 7 per cent from 8.8 days for the year to March 31, to 9.4 days for the year ending in June, despite the ongoing crisis and the significant disruptions to usual business operations.
For simpler cases the yearly average to March 31 was seven days compared with 7.3 days to the end of June.
Pension switching involves moving a defined contribution pot from one provider to the next and is different from pension transfers, which see defined benefit pensions being moved into DC schemes.
According to Origo, simple transfers are those where the ceding provider has complete control over the entire ceding process, therefore they are not complicated by external factors.
Anthony Rafferty, managing director at Origo, said although the Covid-19 crisis had originally impacted providers, they were quickly able to adjust their processes and return to “business as usual”.
He added: “The ability of the industry to maintain transfer performance is due to the effective response of providers and financial advice firms to the crisis, and the automation of the transfer process through the Origo Transfer Service, which has enabled transfers to be carried out as quickly and efficiently as possible despite the dramatic effects of lockdown on companies across the UK.
“Assuming lockdown restrictions will continue to be eased over the next few months, we anticipate that overall the transfer market will remain robust in 2020.”
Colin Campbell, chair of the Origo Transfer Service Steering Group, added: “The fact that during this unprecedented period for the industry, transfer times have been kept to little more than half-a-day of the average before lockdown, is testament to the efficiency of providers’ systems and operations and the Origo Transfer Service.
“Pension transfers processes are significantly improved by automation and when crises occur, as they do from time to time, having the ability to maintain operations at the same high level has to be good for the industry and for consumer outcomes.”
DB transfers
Meanwhile, data from XPS Pensions has shown defined benefit transfer values increased to a new high last month, rising from £258,600 at the end of May to reach £260,800 in mid-June, before falling slightly to end the month at £259,700.
The increase was the result of a rise in long-term inflation expectations during the month, partially offset by rising gilt yields.
Helen Ross, head of member options at XPS Pensions Group, said: “The increase in transfer activity during June is possibly the market catching up following low activity levels since lockdown, due to members hesitating over such big decisions or pension schemes temporarily suspending transfers.
“However, transfer quotation requests have also increased recently, meaning that we could see this trend continue in the short term.”
She added: “With members facing unique pressures over the coming months, we are concerned about a potential increase in poor outcomes, including pension scams.
“It is now possible for schemes to identify whether their members are vulnerable to scams and put protections in place.”
amy.austin@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
