Industry calls for 30 day pension transfer deadline

The Treasury’s own consultation on pension transfers and early exit charges is calling for evidence on problems with pension transfers in the context of the new pension freedoms.

The government is seeking responses to its consultation from pension specialists and individual consumers, both of which will be considered alongside evidence gathered separately from providers by the Financial Conduct Authority and The Pensions Regulator.

This consultation will look at options to address excessive charges for early exit penalties, making the process for transferring pensions from one scheme to another quicker and smoother, and how there can be greater clarity around the circumstances in which someone should seek financial advice.

Hargreaves Lansdown's research found that all of the slowest providers don't use electronic transfers, and that mostly the insurance companies are doing a good job, whilst the occupational scheme providers are not.

Hargreaves Lansdown concluded that whilst there are many benefits to using a trustee structure for pension provision, contract based pensions of the type operated by insurance companies can in some cases produce significantly better results.

Tom McPhail, Head of Retirement Policy, said:

“There is no reason why the vast majority of pension transfers can’t be completed within a week or two. A 30 day time limit isn’t a particularly onerous place to start and is certainly far better than the current statutory limit of 6 months. Pension providers should be dragged into the 21st century and should be encouraged to invest in the electronic systems which help deliver a better service for investors.”