The pension industry is changing rapidly, supported by this government’s development of the pension dashboard, the introduction of collective defined contribution pension schemes and a consultation on the regulation of defined benefit superfunds.
We are unleashing innovation and opening up options for pension schemes members and employers. These reforms will bring the pension industry into the 21st century and deliver for savers.
I am determined to build on this momentum. The pension industry and scheme members will benefit hugely from these reforms.
Knowledge is power, and that’s why increasing people’s engagement with their pensions is at the heart of our modernising drive. Being better informed about the options out there will help savers make the right choices for their retirement.
And when they’ve made those choices, pension transfers need to be efficient. Although some firms are improving there are still companies and schemes for which pension scheme transfers are not quick enough, sometimes taking weeks to process, as the very latest data produced by PensionBee and My Pension Expert shows.
These delays are frustrating for pension scheme members and I completely understand and sympathise with that frustration. This is their money, invested for their futures, after all.
We live in a world where you can transfer thousands of pounds instantly across the globe but where, for some firms, relatively routine pension transfers can take up to 100 days between defined contribution pension schemes. Whatever the complexities involved, clearly that is far too long.
The overall picture is of some firms being slow to adopt modern ways of working. Although I applaud progress made so far to modernise, more needs to be done. I am calling on those in the pension industry who are not taking action already to do all they can to address this pressing issue.
Every little helps, and one of the ways in which transfer times could be shortened is through the use of ‘e-signatures’ which would allow scheme members to authorise pension transfers online, rather than by post.
Electronic signatures are widely used in financial services and insurance and could be a useful tool to help speed up transfers, along with the increasing use of other modern technologies such as faster payments and common data protocols.
The current process is often complicated and slow, and reliant on non-standard forms, and inefficient administration. These practices are out of kilter with the modern world, especially when compared to the digital services offered by the fintech industry.
The pension industry should embrace the digital age by pushing forward with innovation wherever possible. E-signatures are one way in which we could slash pension transfer times, reduce delays and build trust in the pension industry.
Industry’s focus must be on improving the experience of pension scheme members by embracing the very latest innovations in tech, making sure the whole of the UK pension market stays at the cutting edge of modern business practices.
Guy Opperman is Minister for Pensions and Financial Inclusion