Why switching your pensions provider is so traumatic
Switching to another pensions provider is much harder than it should be. Here's how to speed it up.
Switching to another pensions provider is much harder than it should be.
Pension savers are always encouraged to change pension provider in search of better performance or lower charges elsewhere. But how straightforward is it to switch your defined-contribution pension from one platform to another?
Not straightforward enough if your pension is with Hargreaves Lansdown: new research suggests the firm takes six times as long to manage pension transfers as the quickest providers.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The figures come from Origo, the company that runs the electronic system through which almost 700,000 pension transfers are managed each year. It says a Hargreaves Lansdown transfer takes an average of 30.5 days. The quickest provider in the survey, NFU Mutual takes 4.8 days.
To be fair to Hargreaves Lansdown, the survey doesn't cover every pension provider in the market and only includes transfers that go through Origo. Still, the findings show that for all the talk of encouraging savers to be more proactive when it comes to managing their savings, the obstacles put up by pension providers that prevent them doing so are often significant.
Speeding up the pensions transfer process
Arranging your transfer through an independent financial adviser can help you avoid unexpected trouble or at least save you a headache by outsourcing the administrative hassle to someone else. Taking advice on a transfer often makes sense in any case: you need to be confident you're not giving up benefits that you won't be able to match elsewhere, and that you're making a good choice of a new pension provider.
Finally, if you are unhappy with the service you receive while transferring your pension, kick up a fuss. Although regulators keep promising to intervene in the pension transfer market, shaming providers into investing in systems that work better may be even more effective, particularly if you complain loudly and publicly through channels such as social media.
The bottom line is that you must not give up on transferring your pension if you're convinced that doing so will result in you being better off in retirement.
The pensions industry has a vested interest in delay and obfuscation: providers do not want to lose your business. But the short-term pain of getting past the prevarication is worth it for the long-term gain of a better pension elsewhere.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
-
University tuition fees will rise to £9,535 next year – what does it mean for you?
The tuition fee hike has angered many students, not to mention their parents and grandparents who often help with financial support. But will it make a difference to how much you repay in the long run?
By Katie Williams Published
-
Will platinum and palladium rise?
Analysis Platinum and palladium have lagged gold and silver recently, but the outlook is improving. Should you invest?
By David J. Stevenson Published