The UK’s pension switching system continues to be plagued by severe inefficiencies and rogue practices, a new report from PensionBee has revealed.
The report ‘A Switch in Time’ is the first in a three-part campaign series calling for the introduction of a 10-day Pension Switch Guarantee.
While some pension transfers take under seven working days, others drag on for months or even longer, with 27 out of 163 advisers surveyed reporting waiting over a year for a transfer. Only 32 respondents had never waited more than three months.
The report, created in partnership with financial services consultancy the lang cat, said that delays are not only avoidable, but that they are also potentially in breach of the Financial Conduct Authority’s Consumer Duty, causing harm to consumers by preventing them from accessing better products and achieving good outcomes.
According to the findings, 79% of advisers believe transfer delays have a moderate to severe impact on trust, while 82% agree that problematic transfers harm the reputation of the financial services industry and more than 50% report that transfer delays frequently damage client communication.
Advisers were unanimous in their demand for reform, with 97% believing the worst offenders should be required to compensate affected customers, and 96% supporting a change in primary legislation to enforce a reasonable pension switch timeframe. Three quarters (74%) also want a consistent process across providers.
The report is calling for immediate reform of the Amber and Red Flag Scam Prevention process, citing widespread misuse that is creating unnecessary delays. It also urges the FCA, The Pensions Regulator, and the Government to legislate for a 10-day Pension Switch Guarantee, supported by binding service standards, mandatory transparency, and penalties for non-compliance.
Lisa Picardo, chief business officer UK at Pension Bee, said: “The evidence is clear: delays are harming consumers and undermining trust in our industry. The system is letting poor performers off the hook and rewarding the wrong behaviours. The technology and standards exist to support more efficient pension transfers. The will among advisers and consumers exists to see change. What’s missing is meaningful legislation and regulatory enforcement.
“The Government and regulators must now step in and level the playing field, reshaping the pension transfer system that so desperately needs modernisation. That means primary legislation. And above all, that means putting the interests of consumers first. Swift switching isn’t a ‘nice to have’ — it should be a basic right.”
Steve Nelson, insight director at the lang cat, added: “What gets measured gets done, and it’s clear the financial services sector urgently needs to measure and fix the systemic inefficiencies around pension switches that are damaging trust across the board. The delays evident from this research aren’t just frustrating admin issues. They’re symptomatic of a wider dysfunction rooted in antiquated manual processes.
“If we want to build trust with the public and close the savings and pensions gaps, the whole industry needs to up its game and be held accountable. It needs to modernise systems and start acting with a shared sense of urgency and responsibility.”
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