In a recent blog, I pointed to a report that Jonathan Stapleton brings to life with quotes from those working for the personal pensions on the wrong end of the transfer delays (who represent their customers as well).

There is a strong inertia in DC pensions that is created by those who hold the bulk of the money either in legacy personal and section 226 pensions (FCA regulated)  or by occupational pensions governed by trustees but controlled by administrators who are neither regulated by TPR or FCA.

The argument is simple, rather than adopt the kind of technology that allows money to move from one bank account to another, the holders of DC money have adopted “sludge practices” that leave consumers unable to get what they consider VFM. What is worse is that the VFM Framework will do little to help the consumer.

Here are takes  from Jonathan Stapleton’s article which goes into the remedies put forward from those quoted (the actual report is here)

It warned that, as the government prepares for the launch of the pensions dashboards, any increased visibility without a modern transfer system would only lead to mass consumer frustration.

And it said savers were currently “confined” by a 180-day statutory limit on transfers – a limit it said seemed “out of touch” with the rest of modern finance, where a bank account can be switched in seven days and a cash ISA transferred in fifteen.

The report also cited how so-called legacy providers use what it called “sludge practices” – such as requiring signatures on paper forms – to delay transfers. It said even more concerning was the “outright misuse” of anti-scam legislation, where it said firms trigger “amber flags” for schemes provided by prominent providers regulated by the Financial Conduct Authority (FCA).

The coalition of providers .. called on the government to adopt a series of reforms to the system.

Not every digital savvy provider has been a part of this report (I can think of Collegia and Penfold who are missing) but those who make it on the list are to be commended. Here are those who have put time and money into making this report which I urge you to read.

In particular, they called on the government to cut the transfer deadline to 30 working days and for the introduction of a “digital-first” presumption that makes manual paperwork the exception rather than the rule.

The call for action follows a consultation by the FCA, Adapting our requirements for a changing pensions market (CP25/39), which closed on 12 February.

Moneybox director of personal finance Brian Byrnes said:

“For too long, legacy providers have lagged in adopting innovations that improve saver engagement and outcomes. The FCA must look beyond headline statistics and examine why pension transfers so often stall. There are cases where providers flag ‘overseas investments’ while offering the same global tracker funds themselves, raising questions about whether these flags are being used to frustrate legitimate transfers and retain customer funds.”

PensionBee UK chief business officer Lisa Picardo added:

“Individuals carry the risk if their retirement savings fall short, so they should have real choice over how and where their money is invested. They must also be free to move providers easily, yet the transfer process still isn’t fit for purpose.”

People need pensions to be properly marketed – like this (anonymised)

AJ Bell director of public policy Tom Selby agreed:

“Government, regulators, and the pensions industry need to work together to tear down any existing barriers to support the government’s retail investing drive and turn Brits from savers into a nation of investors. Driving down transfers times across the market is essential, as is aligning the regulatory approach for retail and workplace pensions so we can deliver better outcomes for investors and support the UK’s retail investment ambitions.”

Hargreaves Lansdown Head of Retirement Analysis Helen Morrissey added:

“The pensions market is changing and personal pensions have a growing role to play, helping people take control of their savings, and understanding how to build for the retirement they want. Regulation should support this end with transfers taking days not weeks. The current pension transfer system is woefully out of step with wider financial services.”

Freetrade chief executive Viktor Nebehaj added:

“The current pension transfer system is not fit for purpose. At a time when consumers can switch bank accounts in days, it is unacceptable that pension transfers still have a six month deadline. Outdated, manual processes restrict choice, frustrate savers and risk undermining the benefits digital pension platforms can deliver. We need urgent reform to make pension transfers faster, simpler and fit for modern consumers.”