A bottleneck caused by unprecedented volumes of interest in defined benefit (DB) pension transfers could be eased by implementing industry standards, according to Origo.
The service provider said the transfer process was suffering from a disconnect between the information pension administrators consider is needed for a transfer value analysis (TVAS) report and the data IFA firms are requesting in order to advise clients.
Advisers have been complaining that the three-month validity period for transfer values is often not enough to complete the advice process, due in part to schemes failing to provide sufficient information when first asked to do so.
Meanwhile, research from Xafinity showed that by the beginning of the year the number of DB transfers had increased 166% year on year putting a strain on the system.
Origo conducted research among 16 industry third-party administrators and employee benefit consultants and claimed the time needed to undertake a transfer could easily be reduced. It is currently set at about nine months on average.
Origo said the disconnect came from the fact many IFAs were new to dealing with DB transfers and that some administrators were providing the absolute minimum of data required for TVAS, in order to deal with the volume of requests.
The firm’s research said administrators perceived IFAs to not have the technical knowledge and understanding of the transfer process, and that IFAs were applying ‘defined contribution (DC) thinking to DB tasks’.
Meanwhile IFAs considered the information supplied by the administrators to be lacking, saying more suitable information should be provided to enable them to better advise their clients.
Origo believes a better transfer experience would be achieved for all parties by adopting industry agreed data standards and technology.
The firm said it already had “positive” dialogue with the Financial Conduct Authority on the subject.
It said implementing standards was possible in the DB world as they had already helped reduce DC to DC transactions from 10 weeks to 12 calendar days some 10 years ago.
Origo managing director Paul Pettitt (pictured) said: “What our research reveals is an industry under pressure, working in silos, each with different views of their regulatory commitments and counter-party data requirements and so expectations of what is needed, what can be achieved and by when are very different.
“This is resulting in increasing frustrations, spiralling administration costs and poor member experience. It is an issue that needs to be tackled sooner rather than later.
“Origo, is urging the industry to recognise the burdens and issues within the DB pension transfer process and the impact it is having on administration costs and poor member experience and for there to be a collaborative industry approach to solve these issues.”