Legislate to mandate offer of electronic pension transfers and higher standards

You can switch banks in a week and send money instantly, so why should pension transfers take months and be so stressful? Only the government has the power to change this, so we’re asking them to take action and set clear, enforceable standards for faster, electronic pension transfers.

63% of savers believe delays in pension transfers hinder effective retirement planning. Yet we think some providers persist with outdated, paper-based processes. At best, we think this may cause stress and confusion. At worst, we think it may deter people from moving their money, trapping them in poor-value, or unsuitable funds.

Some providers already offer secure, electronic transfers. We think it’s time to mandate this across the industry for fairer, efficient retirement savings.

The Government’s approach is guided by two objectives, supporting efficient transfers, and crucially, ensuring strong member protections, not least against scams. We acknowledge the calls for faster transfers, and we are exploring operational improvements to streamline processes, including the use of electronic processes which can drive real improvements.

Changes driven by mandation across the market, would however, require changes to Primary legislation. We would also need to be satisfied that any changes do not weaken existing member protections or present a heightened risk of pensions fraud. Ensuring there are robust safeguards to enable members to make informed transfer choices that lead to good retirement outcomes is essential.

The last government, in November 2021, introduced the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021. The regulations were intended to better protect pension savers against the threat of pension scams by placing conditions on the statutory right to transfer, through a series of red and amber flags.

A review of the regulations was published in June 2023, as agreed with the Work and Pensions Select Committee. The review concluded that although the original policy intent remains appropriate, feedback from the pensions industry suggests that the practical application of some of the provisions may have contributed to delays in certain circumstances.

In response, the Government has been working with the pensions industry to consider changes that seek to provide a smoother transfer process and proactively respond to any developing risks. DWP is planning to consult on the outcome of this work in the coming months.