Why are transfers still broken in 2026?

0:11Hello and welcome to the FT Advisor podcast, the weekly podcast series brought to you by FT Advisor. Each week we pick a topic to discuss and this week we're diving into pension transfers and the time taken to do them. FT Advisor is championing a cleanup of rubbish processes and our campaign, Tidy Up Transfers, is delving into where we are as an industry and how we can improve. I'm Sonia Arch, Deputy News Editor at FT Advisor, and joining me today are Lisa Picardo, Chief Business Officer at PensionBee, and Andrew Marker, Chair of STAR, the Accreditation Programme for Transfer Performance. Good morning, both.

0:48Thank you for joining me today. Good morning. Thanks for having us. So transfers are one of the biggest pain points that advisors and consumers face but the concern is why has something as simple as moving your own pension become such a difficult process? So Andrew maybe this is something I can kind of start with you the big thing here is if a customer can switch a bank account within seven days why do pension transfers take so long? That's a great question I don't want to put complexity behind it but pensions are generally slightly different to bank accounts. And it's largely down to guarantees, actually.

1:23So each pension is not like-for-like bank accounts or like-for-like. It's a single cash transaction that moves one to the other. That does lead to some degree of complexity. And there's regulation, a more complex layered, like historical regulation behind pension transfers. Now, that's not an excuse to actually make things kind of go slower. What we need to do really as an industry is think about how you can create like a common process because it should make no difference to the type of transfer that you have to move it in a really kind of seamless and a really short time frame. And that's what STAR is actually about.

1:54It's generally there to bring a common set of standards that every kind of organisation in the UK is actually working towards. So if you're all using the same standards, you're all in the same playing field doing exactly the same thing. We just have it a little bit fragmented in the UK at the moment. And Lisa, did you have anything you kind of wanted to add to that in terms of why you think we are where we are right now? Yeah, well, we've certainly been calling for a sort of 10-day switch guarantee for a long time because we actually think that the vast majority of pension transfers are pretty straightforward, actually.

2:25And there isn't really a good reason why consumers shouldn't be able to exercise their right to be able to move their pension transfer, make transfers, move their pensions efficiently. And I know that in the past you've sort of mentioned this kind of broken but fixable. So what do you think is the kind of most broken part of where we're at? I mean, I think it's like if we if we take a positive start, it's fair to say, and Andrew, hopefully you'll agree with this, that a lot of the industry is actually focusing quite well. So the FCA did a review of a lot of the large life insurers and found that, in fact, a lot of pension transfers are happening very efficiently, good time frames, no issues there.

3:09But as Andrew alluded to, the landscape is quite fragmented. We have multiple regulators, we have different types of schemes, we have third party administrators, etc. So it is complex and there are certainly pockets of the industry. Most notably, I would call out the TPR regulated schemes and master trusts where they are struggling to be able to process pension transfers in a timely way for a lot of different reasons. and you know that could be a failure to adopt kind of modern methods and electronic transfer systems it could be because there are there are reams of process that they like to go through in order to do these and also it is about two pieces of legislation I think which you know relate to everybody and I'm sure we'll talk about this in in depth in a minute but it's about the transfer regulations which were introduced in 2021 and it's about the backstop the statutory time frame of six months, which in many ways just sends the wrong message.

4:09Yeah, definitely. And I think there is this kind of topic that keeps coming up, which is obviously the kind of anti-scam rules. So, I mean, before we kind of get onto that and kind of go into that, would you kind of be able to give a brief explanation of what the anti-scam rules are and why do you think that these rules are sometimes, or are these rules sometimes being used to kind of go past the operational efficiency and how these pension transfers work. Yeah, so in essence, in 2021, the transfer regulations were brought in and I think they were, you know, well-meaning, well-intentioned for anybody that has moved a pension and is vulnerable, fallen victim to a scam.

4:50It's incredibly distressing. So a very good intention behind making sure that there are processes and steps in place that where there is a high-risk transfer, you know it is in effect slowed down and taken a really good look at but in the five years that this has been operational we see a lot of problems with the drafting of that legislation and I think the DWP themselves have talked about the issues of this as have the TPR and they've provided guidance there are there are vagaries in the legislation for example there is a clause in there that says if a pension is invested in overseas, if there are overseas investments, that is a good reason to put up an amber flag.

5:34And when you have an amber flag attached to your pension transfer, it sends you into this big loop of admin, a bureaucratic nightmare. And people are sent off to have money helper appointments, etc. They may be asked to do scams forms and questionnaires and it really makes it very difficult for them to achieve the objective of moving their pension transfer yeah yeah and I can imagine it sort of throws off a lot of people that perhaps are not in the industry or kind of not well versed into what what this kind of amber flag even means and what they're doing so Andrew maybe you can kind of come in here and and say what's kind of where's the sort of line between legitimate safeguarding and kind of unnecessary obstruction.

6:18Probably very fine, I imagine. It is a fine line. I think it's really balanced, though. So look, safeguarding is really, really important. We've seen a lot of scams. People have lost a lot of their retirement savings. We need to protect against that. I do think the legislation has been a little bit too broad and gone a bit far. So Lisa makes a really good point around overseas investments. If you look at any kind of general portfolio, particularly in the retail sector, they've probably got overseas investments in there, but that's just part of a good diverse portfolio, that will slow down their transfer.

6:46So I think it's about kind of bringing kind of a more balanced position, which is what would be a legitimate kind of red flag or amber flag, i.e. the scheme was like only just registered for argument's sake, rather than the direct assets they're holding. And we could probably kind of streamline that down so that actually you could allow most transfers to execute in a really timely way. But I think what's more important is those ones that are scams that we are actually stepping in as an industry to kind of protect customers' interests. Of course. But it's a little bit broad in the way that the legislation was drafted, exactly as kind of Lisa alluded to.

7:20And I think because of that, some trustees, particularly on the workplace, have kind of taken a very ultra-cautious approach to the way that they allocate and kind of test against the scams, and that's kind of slowed things down. Yeah, yeah, I can imagine. And I think a lot of the things that we hear is, you know, when people are trying to transfer to some of the big names, some of the big kind of firms, it should be a little bit more seamless because there is already that trustworthy brand or the recognition or it's a footsie company. And that is still kind of creating this divide, perhaps because those regulations are so broad that they kind of apply to everyone and there aren't little caveats within it.

7:56So I guess one of the tensions is that the fraud prevention versus kind of the customer experience is not aligned to some extent. So how do you think we could kind of stop scams kind of creating what critics call like these sludge tactics? I think one of the drivers and this is one of the key things about STAR which is like when you get to common standards which we have set time frames of two days for each step but it's actually the full MI suite which is where STAR is moving towards which is getting transparency on the data because if we start to report that there's great transparency we can actually see the problem that we need to fix because it will quickly identify where you might see a sludge practice and then we can actually identify that then we can engage with our regulators and all of our kind of peers to actually say how do we solve for that but at the moment you don't see that kind of degree of transparency so it's really hard I think to to really focus on what is the exact problem that schemes may be kind of executing and slowing down a transfer like getting the industry to make their transfer kind of data visible I think it's really critical to solving that problem yeah and to create kind of that transparency is that something you sort of see a lot with pinching me because obviously that is literally the business model of doing we love and we love data so we we've taken quite a bold step um in fact for for a couple of years now of actually publishing our own data because as andrew said some data is visible and other data is not visible so even if you look at the orgo transfer times that tends to be the people who make that voluntary disclosure are people who are actually functioning quite well and then where there is poor performance, they tend to go under the radar.

9:32So we've taken the step of publishing data and looking at sort of the various categories of how people are doing. There's a lot of people who are demonstrating that, you know, they can transfer pensions safely, securely, efficiently within, you know, five to 10 days. There's another group that is doing them, you know, around the 20 day, 20 to 30 day mark, which is also, you know, absolutely fine. And then you've got what happens beyond that and there we're seeing that there are sort of repeat repeat offenders I will say who are routinely allowing pensions to drag for months and sometimes even years and that is just where you know we try to show the data so that we can really call that out and say well something really needs to change.

10:19And are you seeing that kind of have an impact on you know people that have kind of started the transfer process or the consolidation process and then them kind of dropping off because of those like directly linked to those bad kind of you see all sorts of things I think you see a lot of anxiety and frustration after you know stepping back and just thinking about pensions compared to the rest of the you know admin tasks that we have to do you know pensions are complicated it is difficult and it takes a lot for a lot of people to get to the point where they think okay do you know what I'm actually going to do something here yeah I'm affirmative action I'm going to consolidate my pots I'm going to move I'm going to make an investment choice I'm going to just engage with my pension which is ultimately what we all want to see because if people engage with their pensions they're more likely to put money in and save for their retirement and we know that there is chronic under-saving so I don't I think these types of barriers can cause anxiety and just ultimately mean that people give up and that's not a good place to be.

11:19Yeah, exactly. And I think that's one of the things that's come through on our Tidy Up Transfers campaign. You know, we're seeing that it's not actually just administrative, like that's one massive aspect of it. But it's taking a toll on people's kind of well-being and kind of their sort of mental health and the engagement that they have. So do you do providers think, you know, kind of underestimate the emotional impact of what this will do to the ultimate kind of client? I'd like to think no. So, and I think majority of those, particularly if you think those who are, you know, registered by the FCA, they have a consumer duty obligation.

11:55Consumer duty is looking at good outcomes, which means they should not be underestimating anything around kind of the emotional strain, the stress that a consumer goes through. And I think the similar sits within the TPR as well. So I think providers want to do the right thing. And majority of those do. I think Lisa makes a really good point. You're seeing really good kind of transfer performance through a number of providers. What I would say is that is based on the electronic transfers. It's the paper stuff that really starts to hurt us a little bit. But I think they are kind of really taking a good position for consumers and really thinking about good outcomes for them.

12:32I do just want to pick up one point, which is that regulatory backstop. I think it's a really important point that is really built for a db pensions world our world is moving into dc much much faster so there is a silver lining that this will get better but it might take a lot longer as we go into electronic transfers but i think we need to think about our regulation that works better for a long-term kind of dc market rather than kind of holding on to a legacy db market that is slowly closing down because it's just not you know you don't hear about that at all now do basically doesn't exist most people are on kind of dc so yeah and when you want to move a db pension you know over 30 000 pounds you need to take advice yeah so there is that safety element already already um and i think i don't think that the six month statutory time frame was designed to be the you know what people aim for no it was actually designed to be the backstop but i think it's on you know it's intentionally unintentionally being used as as a good excuse to delay.

13:31Yeah and I think if I kind of come back to the sort of the transparency point that I think you're making earlier Andrew do you think that kind of advisors and consumers should almost be able to see this sort of league table of those that are kind of doing it best and kind of those that are not and that be widely available to the average consumer not just to financial advisors or clients of advisors? Absolutely I think it's not about whether you're kind of trying to show who's doing good performance versus bad performance, but I think there should be complete transparency across that, which I think is what Star is actually trying to do.

14:03If we have all firms kind of submitting their data, that's where the accreditation comes in. You can see who's doing gold, who's kind of doing silver, and who's doing bronze. So as a consumer or an advisor, you will know the type of experience you're going to get if you're going from a gold to a bronze. You can see there's going to be a slightly longer time frame. But I think transparency is absolutely key if we're going to solve this. If we're not transparent, both to the consumer and to advisors, but also to our regulators. It's like it's hard for them to regulate to solve a problem if we're not clear what the problem is that we're trying to solve rather than just the time frame.

14:37It could be one particular point of regulation that's a problem. We want to get that transparency out there to solve the right problem. Yeah, definitely. And did you kind of want to come in there, Lisa, at all? Yeah, no, I agree with that. I think transparency means, you know, you have accountability, but I also think that it really needs to have teeth. so there does need to be consequence real consequence real implication for providers and administrators you know by the way third party administrators aren't caught by yeah yeah by regulators it's true and i think they're the ones that slip under the radar quite often don't they so yeah there's there's heavy involvement of third party administrators and i think that does that that would be good if that would be looked at as well yeah and i think it's it's one of those things as well that where the transparency comes in and it's something we've tried to do with the campaign is having that level of transparency even if it isn't necessarily to like name and shame it it holds accountability for the providers to act on you know if they are bronze what why are they not gold are they trying to get to gold what are they doing what actionable things are they doing that actually a consumer can look at and say I don't mind moving my pension to this because it's going to actually improve at some point yeah you just have to bear in mind that a lot of people start that journey with retirement savings on the workplace side.

15:54So they never actually made a choice to be with that provider in the first place. They were just auto enrolled into a scheme. So they never really got to see the data to make that choice. It's what happens later down the road when they then want to make a move. Yeah, yeah. I mean, yeah, it's definitely true. And I think even with more and more young people having different pots and having small pots everywhere, there is kind of a more need for people to be like, I've got all this stuff and I don't know what it means. I just want to consolidate it. I want to put it together. And that's where they start to disengage almost because they'll make the decision to be like, I'm going to consolidate.

16:32But then when it comes to consolidating it or trying to put them together, you have all these hiccups along the way, which they're then like, it's a problem for another day, you know. And then it's sort of a domino effect, isn't it? Because it's going to keep happening. Yeah, I mean, all the trends that you mentioned, like frequent job switching, et cetera, you know, those are here to stay. Yeah. That is a huge shift that's happened. And auto-enrollment doesn't account for any of that. And, you know, there's also an increasing workforce that are never auto-enrolled and that really just need to start their savings journey themselves.

17:03So, like, anything that we can do to encourage engagement is positive here. And transparency, one thing, is a motivator for firms as well. Because that point of, like, as you mentioned, if you can, it's to keep them competitive as well. So if they're running at silver and they want to get to gold or however you kind of actually do the measurement, it's that motivator to actually do better if you want to kind of create a better client experience to attract more clients as well because it's about how you want to attract clients in market at the same time. But we do need to kind of solve it as I think as a collective industry.

17:34I think it's really important that we go after it as collectively to solve the right problems that's going to get the right outcome across everything. and it is trying to track simple transfers as well as complex because we don't want to forget the complex because whilst they will probably reduce over time, they are still here to stay for a period of time and it could create a bad client experience at the same time. And I think you said it well earlier when, you know, we were talking about the transfer regs. If we can make sure that all of the straightforward pension transfers to straightforward providers proceed, then we'll actually take less resource and we'll be able to refocus that on true pension scams.

18:11Yeah, definitely. And I think you can't really have the conversation of pension transfers without kind of touching on dashboards. So I guess finally, I would just ask, what role do you think dashboards can play on kind of improving transfer experience? Or do we sort of think it's actually going to do the opposite and go the other way? I'm firstly in terms of volumes I would say like there's I think the Orgo data shows around 1.7 million pension transfers so north of about 70 billion pounds of assets that changed hands last year when the pension dashboard goes live and consumers can for the first time you know have visibility of all of their pots that are in accumulation it's certainly going to lead to an increased volume of pension transfers yeah for sure because I think first of all being reunited with pots that you perhaps had like lost or forgotten you don't even know is a wonderful thing yeah um but then the next question is okay well what do I do about that how do I manage how do I engage and for most people I would imagine the answer is actually I just at least want to start by getting it all in one place and then I will perhaps take the next step of deciding how do I want that to be invested and you know do I want to top up and all the other good things the pension dashboard in and of itself is not a transactional dashboard so it's a view yeah but I think it's a really important first step and I think that's why the subject of pension transfers you know it sounds like it's some niche topic it's really not it's not yeah it's going to touch absolutely everyone if it hasn't already yeah and so that's why you know it's so important that we push on things that can be done now to avoid you know even more congestion in the system.

19:52Yeah definitely I mean it is it is exactly that it's not niche but people think it is niche but it affects absolutely everybody at some point in their life so. The one thing I'd say the pension dashboard can help with as well so I totally agree like you're probably going to people see everything there might be a flurry of people trying to consolidate which means you're going to have an increased volume in market which we as an industry need to be there to and prepared to kind of solve for. But what it might solve for is some of the data points that lead to some of the delays in front of transfers, like the customer gets the wrong policy number, they get the wrong address or whatever.

20:22Some of that stuff might be cleaned up a little bit by the pension dashboard, which allows those providers and all of us to actually try and execute faster. So it could be a bit of a silver lining in the sense that it helps those transfers go a little bit quicker, but I don't think it's the kind of the silver bullet that's going to solve the entire problem for pension transfers as a whole. But it could lead to some sort of like help. Do you think it will kind of almost risk exposing more of the kind of issues as well? I mean, it might do better because of the transparency element and people will be able to see, but is there a risk of it actually going too far, kind of one way where people are like, this is, you know, not going to work for me?

21:01I'm not sure it's going to expose like any particular risk. It's a difficult one, you know, we'll find out when we get there. But I think like what it's going to help is people to see the pension transfers that they have or the pensions that they have, how they can execute those. It will potentially create some kind of bottlenecks on the DB transfers, particularly with guarantees. And I think that's the real challenge for us as an industry is like how do we get our standards to work well so that those with guarantees can execute like in a fast and efficient way. And I think that's the big challenge for us.

21:31But like majority of those coming through on the pension dashboard will probably be like largely simple transfers and they'll probably execute quite well. Yeah, yeah. I mean, I'm looking forward to it. I'm in the process of trying to do my pension right now. And I think it's a, I've had change of address, and they've still sent letters to my parents' house. And I'm like, I've changed my address, I could not live there anymore. So it will be a positive experience. And I think people will have to clean up their data because if you want to move your pension pot, then you do need to make sure your details are correct.

22:00Exactly. In various places, etc. So I think it's just going to be a big moment for people to really have to start to engage. Yeah, definitely. I mean, I think we could talk about pension transfers all day. So I'm sure we will be back to kind of talk about it again. But unfortunately, today, that's kind of all we've got time for. So thank you both for joining me and coming in to discuss such an important topic. and of course thank you to those of you who are listening join us next week as we discuss another hot topic in the financial services industry

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