Why in this day and age is switching your pension to another provider so hard?
If you want to switch your current account in the UK, then – due to the Current Account Switch Service – you can now expect to wait no longer than 7 days until the switching process is complete. This sounds like a pretty good scheme, doesn’t it?
Unfortunately, it seems that when it comes to switching your pension from one provider to another, things aren’t so straightforward and simple. In fact, according to new research from online pension manager PensionBee, switching your pension to a new provider could take an average time of up to 59 days depending on who your current pension provider is.
Time for a Pension Guarantee?
The research has led PensionBee to call for a ’10-day pension switch guarantee’ like the one already in operation for current account switching. Under FCA (Financial Conduct Authority) principles, financial firms have a duty to treat customers fairly and there are certainly questions to be asked as to whether needlessly long pension transfer times or even so-called ‘delay tactics’ are meeting these principles.
Many of those who have switched their pensions have reported grievances such as puzzling forms, unreturned calls and requests for original birth certificates before they were eventually allowed to switch. With all of this in mind, the calls for some kind of pension switch guarantee seem to be growing louder by the day.
Removal of Exit Fees
Another problem some who are looking to switch their pension are encountering is that of high exit fees. While not all providers can be accused of putting up this kind of hurdle, a handful of providers are still falling foul in this regard.
This problem has led PensionBee to call not only for a pension switch guarantee but also for a complete abolition of pension exit fees, so that customers can feel free to move their pension without their pension pot taking an upfront hit.
Biggest Providers Worst Offenders
While you might expect the biggest pension providers to adhere more stringently to the FCA principles of treating customers fairly, recent customer experience would suggest otherwise. One customer, Melanie, who recently experienced the pension switching process said:
“One of my providers asked me to provide details of how I became aware of the scheme, details of all the promotional material I received, what other investments I planned to transfer, what advice I had taken (and the details of my adviser) and any other investments my adviser recommended. It seems a very paternalistic and almost patronising response to a transfer request. As Vice Chair of a health authority helping to manage a budget of £820 million, I feel fairly qualified to manage my pension arrangements. At the end of the day it’s my money, not theirs.”
Adding to Melanie’s assertions, Romi Savova, CEO of PensionBee said:
“The biggest providers should be setting an example, but they’re often the worst offenders. They’re sluggish, unhelpful and act like the self-appointed pension police, on some occasions bombarding customers with scam warnings to put them off – even if they’re transferring to another FCA regulated business!”
It seems, then, that the biggest providers may be the worst offenders in delaying your pension switch.
Simpler and Swifter
So, if you’ve experienced problems in switching your own pension, then why not join those making the call for a simpler and swifter pension switching process by way of a pension switching guarantee or service, like that which is currently in operation for current accounts in the UK.
There have been many changes to the UK pension system in recent times to give customers more choice, now it seems those same customers need a little more protection and support to make these vital decisions in an efficient manner.