Pension Transfer Delays Force Savers to Abandon Plans, Which? Reports
The consumer advocacy group Which? has issued a stark warning that lengthy delays in pension transfers are causing some savers to completely give up on moving their retirement pots. According to their research, antiquated processes and excessive wait times are undermining confidence in the system.
Lengthy Wait Times and Frustrated Savers
Which? highlighted that while pension providers are legally permitted to take up to six months to complete a transfer request, some cases drag on far longer. Members of the Which? Connect online research panel reported experiences where the process took over three months, with some abandoning it entirely due to frustration.
In one particularly alarming instance, a 61-year-old man attempted to consolidate three pension pots for easier management. While two transfers were finished within a few months, the third took a staggering 15 months to resolve. During this extended wait, he began to worry about the safety of his savings, noting that the delay made him question potential scams. When the transfer finally completed, he described it as a "huge relief."
Root Causes of the Bottlenecks
The consumer group identified several key factors contributing to these delays. Outdated administrative practices, such as the requirement for "wet" ink signatures, slow down the process significantly. Additionally, anti-fraud warning flag systems, while important for security, are sometimes incorrectly applied to legitimate transfer requests, adding unnecessary friction.
A financial adviser shared an example with Which? where a client faced a nine-month wait, underscoring the systemic nature of the problem. With the development of pensions dashboards—which will allow individuals to view all their pensions in one place—more people are expected to engage with their retirement plans, potentially exacerbating these issues if not addressed.
Regulatory Responses and Industry Views
The Financial Conduct Authority (FCA) is proposing new measures to better support non-advised consumers in making transfer decisions. These reforms include a 10-day data-sharing deadline, clear side-by-side comparisons of old and new pension schemes, and industry-wide acceptance of digital signatures to modernise the process.
Jenny Ross, Which? Money editor, emphasised the urgency of the situation: "It’s essential the industry urgently gets to grips with the issues facing pension savers and ensures a consistent service for those moving their retirement pots."
Sir Steve Webb, a former pensions minister now at LCP, acknowledged the need for efficiency but cautioned against haste. He pointed out that some old pensions may have valuable features, such as early access or extra tax-free cash, which should not be discarded lightly. He also warned that the transfer stage is a peak time for vulnerability to pension scams, making proper checks crucial.
Henry Cainen of the Association of British Insurers (ABI) stated that the industry is committed to improving transfer efficiency, citing initiatives like the Star programme which promotes good practice. Patrick Heath-Lay of People’s Partnership added that while transfers must be handled carefully due to their long-term impact, the process should be simple and efficient once a decision is made.
Looking Ahead
Which? expressed concern that the current system is "not fit for purpose," especially as more savers seek to consolidate their pensions. The FCA's proposals aim to provide clearer, more timely information to consumers, with the regulator noting that over 75% of sampled firms complete transfers within 10 days. However, the persistent delays highlight a pressing need for industry-wide reform to restore saver confidence and streamline retirement planning.
