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.

Couple with financial adviser © Getty Images

Independent advice can help you overcome some of the obstacles when switching your pensions provider

Couple with financial adviser © Getty Images

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.

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.

Recommended

The return of annuities for retirement income
Pensions

The return of annuities for retirement income

Rising annuity rates offer an improving alternative to income drawdown for those looking for an income in their retirement.
22 Jun 2022
High inflation means the end of the “4% rule” for retirees
Pensions

High inflation means the end of the “4% rule” for retirees

High inflation means that it’s time to reassess how much you withdraw from your pension each year if you don't want to run out of money .
14 Jun 2022
Transferring out of your final salary pension could cost you dear
Pensions

Transferring out of your final salary pension could cost you dear

Thinking about transferring out of a final salary pension? It could cost you a lot more than you might think, says David Prosser.
30 May 2022
Private pensions: act early to avoid a big inheritance tax bill
Pensions

Private pensions: act early to avoid a big inheritance tax bill

Frozen inheritance-tax thresholds mean HMRC is taking ever more in death duties. But there are steps you can take to avoid it, says David Prosser.
18 May 2022

Most Popular

UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
22 Jun 2022
Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022