Pot follows member (unless we want to keep it where it is).


In a statement this week on the sluggish service standards of firms administrating our Defined Contribution occupational pension schemes, the PLSA concluded

The median transfer time is 11 days, and although some are much longer1, this is principally due to the need to combat fraud risks and achieve appropriate oversight. Whilst the speed of a transfer is one element that a trustee must consider, ensuring the transfer occurs safely and that members get the maximum benefit from their savings is of greater importance. In an environment where pension scams are occurring at an unprecedented level, a degree of caution on the part of occupational schemes should be welcomed.

The PLSA use statistics cleverly. As this table shows, the transfers completed by Pension Bee last month were typically completed in around 12 days. But these were the transfers which used the Origo system where due diligence is a priori and does not need to slow down the process.

In a survey published on the same day as the PLSA’s statement, Pension Bee published the second iteration of its Robin Hood Index, showing who was sharing and who was lagging.

robin hood

Pension Bee’s Robin Hood Index


With the exception of Aegon (which I will return to), all of the pension providers offering  “manual” services were at least twice as long in transferring and the worst offenders getting on for four times longer than those using the automated Origo service.


So what is going on?

Value for money in pensions is mostly about investment outcomes but partly about the customer experience. If people are trying to move away from Willis Towers Watson, NEST, NOW, Aon Hewitt and Capita they are getting a bad customer experience.

If this could be explained by these organisations offering due diligence on the destination of the transfer (as the PLSA) would have us believe, I would accept that this compensates the customer. However there is no evidence to suggest that there is a higher level of due diligence from the administrators of the occupational pension schemes (the manual ones). Origo offer the following statement concerning members of their options club.

To clarify, Origo does due diligence on potential joiners to the Options Transfers service to see if we are happy to contract with them to supply the service. This is in no way intended to replace each providers due diligence responsibility on for the individual transfers they conduct with counterparties (on or off Options). Options is simply the online system to make these transfers happen quickly.

You can choose to do whatever level of due diligence you are happy with on your transfer counterparties, ongoing or one-off, as can the all the other companies on Options too. The individual transfer/don’t transfer responsibility sits with the ceding and receiving providers/administrators/schemes, based on their own due diligence.

Pension Bee are one of the options on Origo as are all the others using an automated process.

There are two exceptions worthy of note. People’s Pension is an occupational pension using Origo and automated process and Aegon uses Origo and has chosen to turn off automation to Pension Bee – (Infact it appears to be turning off transfers to Pension Bee).

Having to wait an average of 51 days to get a DC transfer paid?

The disparity between manual (43 days) and automated (12 days) suggests that the manual system defended by the PLSA simply isn’t fit for purpose. As Pension Bee are a member of the Origo Club, they should not need another month’s due diligence every time an occupational pension is requested money.

I conclude that the problem is not with due diligence (which for all for obvious exceptions – the scams) is a red herring, the problem is in the passing of pieces of paper by post from one post box to another. This is precisely what Pension Bee and others report is going on.

My own personal experience bears this out, when I consolidated my DC pots , those using the Origo hub were transferred in days, the rest in months. That was two years ago but nothing much seems to have changed.

Tom McPhail, who led the PLSA/ABI research, has come to a very different conclusion to the PLSA.mcphail

“Sooner or later we are all going to have to find solutions to this challenge of how we serve our customers. It is far better that we work out the solutions for ourselves that work best for us, rather than having them imposed on us by the regulators.”

He claims that in the joint working group he chaired

“We’ve had lots of GPP, technology solution and SIPP providers coming along to the workshops. The bit that’s missing at the moment, and where we don’t have enough representation, is from the occupational pensions sector, which interestingly is quite often where the longest delays occur.”

Occupational schemes and their administrators are clearly not giving their problem much attention.


It is understandable – from a commercial basis – that commercial master trusts and even non-commercial occupational pension schemes do not want to invest in processes that lose them assets and thus revenues/members.aegon-logo

Understandable but not condonable. Respecting the wishes of members, whether they stay or go is part of “treating customers fairly”. In some cases, such as NEST, who only started offering transfers-out in April this year, I’m prepared to give the benefit of the doubt.

But something very different appears to be happening at Aegon. As has been reported in the FT, Aegon appears to have drawn up the bridge and stopped transferring money to Pension Bee.

We are conducting due diligence in this area for an organisation representing thousands of small businesses whose employees are looking for a good customer experience. As part of this we have been looking at Pension Bee’s Robin Hood transfer index and this has led us to ask Pension Bee what is gong on.

What we are discovering  is deeply worrying. It appears that Aegon, despite their being in the same transfer club as Pension Bee, is imposing a transfer ban on monies flowing out of its products towards the Bee.

I have written to Aegon and its IGC for clarification as to why this is, but have a pile of documents in my inbox that leaves me in no doubt that the requests of customers are not being executed with no reason given to customer or to new provider.

This is not restoring confidence in pensions

Whether it be due to underinvestment, laziness or over-zealous due diligence, it appears occupational pension schemes are seriously lagging SIPP and GPP providers (and Peoples Pension) using automated transfer processes. I do not buy the PLSA’s due diligence arguments which look like a smokescreen to me.

What is happening at Aegon is a mystery, but the longer I wait for a reply from the company and the IGC, the more suspicious I am that Pension Bee is being blocked for no good reason.

Due Diligence on Pension Bee is not hard to do, their’s is a simple proposition which is backed by the FCA, HMRC and Origo.

The general direction of travel is towards pots following members. If they get stuck the cost of maintaining small pots falls either on the providers (with the capacity to improve things being reduced) or on the members (as happens at NOW pensions – whose deferred members with small pots can suffer up to 10% pa charges on their funds.

The Origo initiative (which I thoroughly support) allows pots to follow members by creating a club of providers who work together to make this happen quickly and efficiently.

Occupational pension schemes should look to be joining that club, as People’s Pension has. If they do not work with Origo but continue to have slow transfer times they should be called to account.

If Origo members turn on other members of the club for no obvious reason then they should be referred to the FCA for not treating customers fairly. This is what Aegon’s current behaviour runs the danger of doing.


NB outcome 6

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Pot follows member (unless we want to keep it where it is).

  1. Adrian Boulding says:

    The charging structure at NOW: Pensions was a deliberate choice in 2012, part of our strategy of bringing a different approach to UK pensions. Unlike many other schemes, we do not ask our loyal long paying members to subsidise those who have left a small pot behind, expecting it to be looked after for 30 years until they return at retirement date. This delivers better returns to those who have a worthwhile amount of retirement savings with us. And to be fair to those who have left early, probably through a change of employer, we actively encourage them to consolidate, either by transferring away or by transferring other pensions in. We make no exit or entry charges for consolidation.

    The 10.4% figure in this week’s PensionsBee advertorial is therefore based on their sample of very small pots that we have encouraged to transfer and so is not representative of NOW: Pension’s charges generally.


    • henry tapper says:

      Adrian, http://www.pensionplaypen.com has always discouraged employers with high-turnover and low contributions per member away from NOW. However you appear to have quite a lot of employers participating who fit this description and whether you like it or not, there are a lot of deferred members with small pots who will be deferred members with no pots unless they TV out asap!

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