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Pension firms ‘should copy banks’ 7 day account switch guarantee’

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
24/05/2016

Transferring your pension from one provider to another should be done within seven days, according to Hargreaves Lansdown pension expert Tom McPhail.

He said the seven day current account switch guarantee should apply to investors moving from one pension provider to another as “the vast majority are simple transactions which shouldn’t take longer than a week”.

McPhail, who is head of retirement policy at the firm, said that while pension account switch times have fallen from an average of 50 days to two weeks, the industry needs to “up its game” in order to benefit customers.

He said faster switch times have stalled and pension transfers between some providers are actually “slower today than they were three years ago”.

“Pension transfers are far, far faster and more efficient than they were in the bad old days. However there is a risk that this progress is stalling and that consumer confidence could be undermined by uncertainty over how long the process takes. The pensions industry should work together with policymakers to establish a seven day pension transfer guarantee,” he said.

“Where advice is required, or there are non-standard pension assets, then delays may be appropriate, in part to protect consumers. However, the vast majority of pension transfers are simple transactions, no more complicated than switching a bank account and should take no longer than a week to complete.”

Average transfer times are around 11 days, but transfers from occupational pension schemes have an average delay of 39 days.

McPhail said delays in transfers means investors are less likely to move their money, competition is inhibited so money’s left languishing in poor performing funds, investors are less likely to engage with their retirement savings and there’s less pressure on providers to improve their performance.

 


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