Scale of pension switching crisis is even bigger than you thought

At The Timebank, we work with hundreds of advisers who all want the best outcomes for their clients.  

This means we are on the frontline of dealing with pensions providers, and understand the pain of gathering information and transfer delays. But the stark truth has been confirmed by new research from PensionBee.

The pension consolidation firm spoke to 160 advice professionals in a survey conducted by financial services consultancy, the lang cat.

It found shocking inefficiencies and delays still plaguing pension transfers, hampered by outdated processes, inconsistent standards, exploitation and lack of regulatory enforcement.

In one particularly outrageous case one pension holder was forced to wait more than 1,000 days to switch their pensions.

More than one in six advisers have experienced a pension transfer taking longer than a year.

Clearly this situation is leaving advisers’ clients extremely frustrated, and the knock on effects are rippling through the sector.

Poor switching experiences are harming the reputation of the financial services industry, according to 82% of advisers.

At the same time 79% say transfer delays have a moderate to severe negative impact on trust in pensions.

Despite clear evidence that efficient transfers are entirely possible, with some providers switching funds in under 10 days, other firms are routinely taking several months or more, according to data collected by PensionBee.  

Pension consolidation is a key route for consumers to simplify and better manage their pensions.

Often, they’ll benefit from lower fees, better performance and stronger engagement which ultimately lead to better retirement outcomes.

With this in mind, advisers are voicing frustration at the damage being caused by excessive red tape and inconsistent use of the Amber and Red Flag scam-prevention framework when it comes to pension transfers.

The report finds near-universal support for a shake-up of the current situation – with 96% of advisers saying they would support legislation to mandate a reasonable transfer timescale for pension switches.  

Ultimately a 10-day Pension Switch Guarantee is urgently needed, Pensionbee says.

Nearly three quarters of advisers surveyed want a standardised process across all pension providers. Almost all believe the worst offenders should be held to account.

Lisa Picardo, chief business officer UK at PensionBee, said: “There’s nowhere to hide; the data highlights exactly where the problems lie, and it shows that the adviser community wants change.  

“It’s time for the regulator and Government to drive the modernisation of the industry through regulation, and for the worst offenders to be held to account. It’s time to finally give consumers the fast, fair and functional pension transfer system they deserve.”

Feel welcome to get in touch if you would like us to share some of the burden of delivering your service and let you get back to spending most of your time with clients.  It is the thing they value the most from you.

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