Leading master trusts have launched a group to look at ways to make pension transfers more efficient for savers.
The group, known as Pathfinder, encompasses eight master trusts, including People’s Partnership, Smart Pension, Nest and Now: Pensions, representing more than £162.7bn in assets under management and 14.5 million members.
Pathfinder will examine how pension transfer processes can be modernised through the use of open, interoperable standards, while sharing operational experience and identifying ways to improve transfer journeys across the workplace pensions market.
It is also exploring how earlier data validation could reduce transfer delays and rejection rates by identifying issues before transfers progress too far.
The initiative, which looks to grow, comes as transfer volumes are expected to rise with the introduction of pensions dashboards.
Smart Pension chief operating officer Sue Whittington says: “Master trusts need transfer processes that match the scale and expectations of today’s market and the significant rise in transfers on the horizon. We’re delighted to be taking this forward, collaboratively, with our industry peers, delivering a solution shaped by the industry itself. Pathfinder has shown that open standards can work through a live transfer, with further transfers already underway. It has also shown that there is a way to improve the transfer process, by better supporting saver engagement with increased transparency and completion rates.”
People’s Pension chief operating officer Angela Staral says: “This pilot project represents a promising first step in assessing open standards as a way to improve DC pension transfers. As an organisation committed to innovation in pensions, we are pleased to be part of this initiative. It is important to recognise that transferring a pension is fundamentally different from switching bank accounts, as the decisions made can have long-term implications for retirement outcomes. That said, once savers have made an informed choice, the process itself should be as simple and efficient as possible.”
Nest chief customer officer Gavin Perera-Betts says: “As part of the Pathfinder group, Nest supports practical solutions that modernise pension transfers and reduce costs across the board. But ease must go hand in hand with protecting savers. Our members’ pension savings are one of their most significant financial assets, so we want to ensure improvements to the transfer process focus not only on improving efficiency but on helping members to make the right choices, as well as protecting them from fraud and unauthorised access.”
Mercer UK’s head of DC product and now:pensions CEO Patrick Luthi says: “As an industry we are always looking for ways to improve our members’ experience, and this includes during transfers. We support the work of the group to investigate if open standards could provide better outcomes for members. This is especially important considering the potential increase in transfers under the small pot consolidator because of the recently passed Pensions Schemes Act.”
