The key reason stopping people from transferring their pensions: ‘Not fit for purpose’

There are benefits to moving pensions around but, as Which?

found, some transfers can take up to six months to complete
The benefits of transferring or combining pension savings include lower fees or less admin.

But Which?

said providers are permitted to take as long as six months to complete a transfer request.

Some members of its Which?

Connect online research panel said they had eventually given up on the process as a result.

Which?

said with pensions dashboards being developed, which will make it easier for people to see all their pensions in one place, more people are likely to be engaging with their retirement plans.

Which?

said it is concerned the current system is “not fit for purpose”.

The consumer group said in one case, a 61-year-old man decided to consolidate three pension pots to make them easier to manage.

While two of the transfers were completed within a few months, the third took 15 months to resolve.

During the wait, he started to question the safety of his savings, telling Which?: “You do hear about pension scams, so it crossed my mind as things started to drag on.”
When the transfer finally went through, he said it was a “huge relief”.

A financial adviser also told Which?

about a nine-month wait faced by one of his clients.

Which?

said that in general, bottlenecks can be caused due to antiquated processes, often requiring “wet” ink signatures.

Sometimes, anti-fraud warning flag systems can also be applied by firms to legitimate requests, it added.

The reforms will propose a 10-day data-sharing deadline, clear side-by-side comparisons for new and old schemes, and an industry-wide acceptance of digital signatures.

The FCA told Which?

its review found more than 75 per cent of sampled firms completed pension transfers within 10 days.

It also stated the new proposals would provide consumers with “clearer, more timely and more meaningful information when considering a transfer”.

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