Origo's response to the Treasury’s paper
Origo's Managing Director, Paul Pettitt, comments on the release today of the response to the Treasury’s paper on pension transfers and early exit charges.
Commenting on the release today of the response to the Treasury's paper on pension transfers and early exit charges, Paul Pettitt, Managing Director of Origo, says: "Both the time frames to effect pension transfers and the costs of transfers to employers and providers, can be cut by using electronic transfer processes - and the technology already exists in the market through Origo's Options Transfers service.
"The speed of the transfers, outside of the need to take advice, will be down to individual companies, employers and the systems and processes they employ. Those employing electronic transfer services such as Origo's Options Transfers, and making use of industry agreed standards such as Origo's Common Declarations are already well placed to effect speedy transfers for their members. Various occupational pension providers and third-party administrators are already reaping the benefits that the service provides to their members.
"Full audit and reporting capability for the entire end-to-end transfer process is also provided through Options, enabling users to fulfil the new regulatory requirement for TPR regulated pension schemes to report on an ongoing basis how they are performing in processing transfers.
"What generally holds back transfer speed is where paper-based systems are used. The overall speed and efficiency of the process will be affected by the slowest cog in the machine, so to speak."
To illustrate the progress that can be made through use of the right technology, data released by Origo in November 2015 into the Contract Pension market (Options handles around 95% of contract pensions transfers in that market) showed that, in terms of transfer times, the long standing average remains at 6 calendar days. Post April 2015 it had risen to 8 days, largely due to the impact of withdrawals under the new Pension Freedoms, which require safeguarding benefit checks that take place within Option's measured timescales. The fastest transfer time at that point was 55 minutes 35 seconds - a significant improvement on the 39 working days quoted in the Treasury's paper.
Pettitt adds: "There is no doubt that faster processing of individual pension transfers in the trust-based market is possible now. However, in respect of overall timescales, in our response to the Treasury consultation, we advised that Treasury should remain cognisant that speed of transfer has to be balanced with consumer protection, effective procedure, appropriate risk mitigation and overhead cost. This is particularly pertinent given the increase in pension scamming and pension liberation attempts."