The Pensions Administration Standards Association has encouraged schemes and administrators to process transfers that do not raise red flags as quickly as possible.
Issuing new guidance for defined contribution transfers on October 10, the group acknowledged that the time taken to process transfers and the process followed “vary hugely”, adding that this has a “detrimental impact” on the service provided to savers.
PASA said that some transfers take months to complete, while the processes involved can be “lengthy and opaque”.
“There’s a perception schemes try to hold on to funds for as long as possible, with a consequent impact on saver benefits,” it said.
“Transfers not raising any red flags should be processed as speedily as possible, to ensure good saver outcomes.”
Transfer volumes processed via the Origo Transfer Service surged 132 per cent between 2015-16 and 2021-22, PASA noted. Legislative changes have put new obligations on those processing transfers, while scams have also increased.
The association also warned that the imminent arrival of pensions dashboards is likely to encourage higher transfer volumes.
PASA has included a template for transfers, with a DC focus, as part of its new guidance.
The guidance provides “a standardised and non-prescriptive process flow for transfers”, recommending that trustees agree service level timescales upfront with their administrators. It also suggested that smaller organisations with fewer resources would benefit particularly from template communications.
The flagging system for pension transfers has identified risks with almost all defined benefit pension transfers this year.
In August, around 91 per cent of DB transfers were registered as having one or more scam warning signs, according to XPS Pensions Group. This was down from an all-time high of 97 per cent of transfers in June.
The Pensions Regulator and the Department for Work and Pensions, meanwhile, are reviewing transfer regulations that came into force earlier this year in response to concerns over delays to transfers.
Alex Janiaud is deputy editor at Pensions Expert, FTAdvisers sister publication
