Pension transfers held up by ‘slow’ DB schemes

Many pension schemes are unable, or unwilling, to support the new pension flexibilities, which is causing problems with pension transfers. Jenna Towler finds out more...

Pension savers who have requested information on their assets in defined benefit (DB) schemes are being forced to wait up to three months for the facts, Portal Financial has said.

The at-retirement adviser said defined contribution (DC) savers were waiting for about five weeks for information.

Its analysis covered 12,852 requests for information made by Portal Financial on behalf of 7,913 clients to 1,396 different DC and DB pension schemes.

Portal said Halifax was the quickest DC scheme to provide information, taking on average one-and-a-half weeks. Government-backed auto-enrolment scheme NEST took five weeks, it said.

In the DB space, the Railways Pension Scheme was on a par with DC schemes with an average of just under two weeks.

However, Portal said members of the First UK Bus Pension scheme had to wait almost three months for information. The scheme took an average of 12.4 weeks to respond to requests, Portal said.

Slowest DB schemes to provide information Average no. of weeks
Greater Manchester Pension 9.7
West Midlands Pension 10.6
Royal Mail Pension 11.2
Civil Service Pensions 11.6
First UK Bus Pension 12.4

 

Fastest DB schemes to provide information Average no. of weeks
Railways Pension Scheme 1.9
Clerical Medical 2.5
DHL Group Retirement Plan 2.6
Prudential 2.6
Legal & General 2.7

 

Slowest DC schemes to provide information Average no. of weeks
St James’s Place 4.2
ReAssure (HSBC) 4.3
Capita 4.5
Mercer 4.9
NEST 5

 

Fastest DC schemes to provide information Average no. of weeks
Halifax 1.5
Canada Life 1.7
Fidelity Pension Management 1.9
Sanlam Financial Services 1.9
Scottish Widows 1.9

 

Portal Financial managing director Jamie Smith-Thompson said: “Currently, many pension schemes are unable, or unwilling, to support the new pension flexibilities and, therefore, members of these schemes need to transfer to a provider that can.

“However, a transfer cannot take place until we are in receipt of the latest information and, only at that point, can we provide the necessary advice on a possible transfer. It is, therefore, incredibly important that it is provided in a timely manner.”

He added: “Clients simply don’t understand the delays as it just doesn’t seem possible to them that their financial services providers don’t have the information at the touch of a button.

“The delays can be very stressful and many scheme providers urgently need to improve their response times.

“We believe that action is necessary and pension transfers should be as simple as changing bank accounts with clear service levels and timings that need to be adhered to.”

Transfers out of unfunded pension schemes (such as the Civil Service scheme) were banned after the introduction of pensions freedom and choice.

The data quoted by Portal runs from 21 September 2014 to 20 September 2015.