Delays cause consumers to wait 'far too long' for pension transfers

The company’s 2023 Retirement Fairness Index discovered retirement planners in the UK face waiting between 18 days (Prudential) and 120 days (XPS Administration). 

Delays in transferring money from the pension scheme members’ existing providers can be stressful. Members may also suffer detriment, by missing out on potential returns. Others will be reliant on receiving the income from their pension, so a transfer delay can leave them exposed, financially.

The quickest companies to make transfers were Prudential (an average of 18 days per transfer), Clerical Medical (22 days), Reassure (22 days), Sun Life Financial of Canada (23 days), Standard Life (23 days) and Scottish Widows (24 days).

The slowest was XPS Administration – a considerable outlier at 120 days – while the next slowest were DHL pension department (65 days), Willis Towers Watson (62 days), Nest (60 days), The People’s Pension (59 days) and Scottish Friendly (58 days). 

Slow and opaque system takes too long

Lily Megson, policy director at My Pension Expert, said the data shows that retirement planners in the UK are waiting “far too long for their hard-earned savings and investments to be transferred” and that the government and pension sector must work together to address the situation.

“The process is too often slow and opaque, leaving the customer wondering where their funds are and why providers are taking so much time to transfer them across,” said Megson. 

“While we must accept that this cannot happen instantaneously – security checks and due diligence is required – we must fight against what has become an accepted notion in the industry that pension transfers can take weeks if not months to be completed.

“It is not good enough and undermines people’s trust in the pensions sector.”

Delays are annoying, but do prevent scams

Trustees and administrators have the difficult job of setting people’s expectations about the transfer process and how long it will take and telling them everything at the start could put them off, but waiting until an amber or red flag pops up will also cause annoyance when you explain there is another process to go through.

“We hope members will understand that the amber and red flag process is there for their benefit, to help protect them from scams. But in the moment they are confident what they are asking to be done isn’t a scam so they just get annoyed instead,” said Lynda Whitney, senior partner at Aon. 

“As an industry there is a difficult balancing act trying to juggle speed of service for those who legitimately want to move their money to a sensible alternative pension scheme and protecting members who have been sucked in by the scammers.” 

Whitney points to the case studies listed in the Pension Scam industry Group’s best practice document combating pension scams (from page 90) that highlight how consumers have been protected by the measures designed to combat pension scams.

The devil is in the detail

The analysis contained within the 2023 Retirement Fairness Index covered data from 3,953 pension transfers it had managed on behalf of clients during the 2022/23 financial year. 

The measurement was taken from the date an application was submitted to a pension provider to when confirmation was received that the fund had been transferred between 6 April 2022 and 5 April 2023.

It covers both electronic and paper based requests My Pension Expert made of ceding schemes that received a minimum of 10 transfers through the period.  

A spokesperson for People’s Partnership, provider of The People’s Pension, was at pains to point out that the times experienced by My Pensions Expert do not reflect all of the transfer requests from the scheme.

“It’s totally misleading to say that our average transfer time stands at an average of 59 days,” said the People’s Partnership spokesperson. “This data is based on a sample size of 43 people, compared with the tens of thousands of transfers we process each year.

“It also includes the time taken for a member or receiving scheme to provide full information on the requirements and details needed for us to comply with regulations and process the transfer.

“It’s not possible to start or process a transfer without this information, which is required for consumer protection.

“The industry-recognised transfer figures show that our transfer times for last month stand at 18 days. We continually work to reduce these times.”

A Nest spokesperson said: “We’re always looking at ways to improve our transfer process to ensure it is efficient, easy to use, and robust. Our average transfer time is 21 days.”

Echoing Whitney’s points about safeguarding, they said regulations in force from December 2021 have required additional checks to be undertaken when completing a pension transfer.

And added: “This is an important safeguard to help protect people and their retirement savings from pension scams.”