BRITS are giving up on transferring their pensions because of lengthy delays of up to 15 months, according to Which?.
Benefits of transferring or combining pension savings can include lower fees and less admin, but providers are permitted to take as long as six months to complete a transfer request.
However, Which? said its survey found one in ten of the 101 people who had attempted transfers eventually gave up on the process.
One in ten also said the transfers took more than three months and up to six months to complete.
Meanwhile, in one case, 61-year-old John Wilson had to wait 15 months for the final of his three pension pots to transfer.
Initially, Mr Wilson was told that the firm had to disinvest money from his main fund – a standard practice in defined contribution pension transfers – and this is what caused the delays.
After six months, Mr Wilson became concerned and questioned whether he had been scammed.
When the transfer finally went through, he said it was a “huge relief”.
After complaining, he received compensation for the delay but felt there was “no acknowledgement” of the “discontent and distress” caused.
Meanwhile, another had to wait nine months and their children originally reported it to the police over similar fears that they were being scammed.
Which? said with pensions dashboards being developed, which will make it easier for people to see all their pensions in one place, more people are likely to be engaging with their retirement plans.
However, it’s concerned the current system is “not fit for purpose”.
It added that in general, bottlenecks can be caused due to antiquated processes, often requiring “wet” ink signatures.
Anti-fraud warning flag systems, which serve an important function, can also be applied by firms to legitimate requests.
The Financial Conduct Authority (FCA) is proposing new measures to better support non-advised consumers making transfer decisions,
The reforms will propose a 10-day data-sharing deadline, clear side-by-side comparisons for new and old schemes, and an industry-wide acceptance of digital signatures.
The FCA told Which? its review found more than 75% of sampled firms completed pension transfers within 10 days.
It also stated the new proposals would provide consumers with “clearer, more timely and more meaningful information when considering a transfer”.
Jenny Ross, Which? Money editor, said: “It’s essential the industry urgently gets to grips with the issues facing pension savers and ensures a consistent service for those moving their retirement pots.”
Lisa Picardo, chief business officer UK at PensionBee, added: “The UK’s statutory deadline for pension transfers hasn’t changed since the nineties and is grossly outdated.
“A six-month limit designed as a backstop has, in practice, become a benchmark that has allowed poor experience to go unchallenged.
“Those approaching retirement are left waiting on pension money when they need it, while others may be left stuck in poor performing funds, paying high fees or missing out on better technology, tools and customer service.”
A statement from the FCA said: “We know that more and more people are looking to transfer and this is why we’ve set out proposals to better support consumers making decisions.”
Why do people transfer their pension?
THERE are a number of reasons why you might want to transfer your pension.
A pension transfer is where you move one of your pensions to another provider, or merge pension pots together.
You might choose to do this to keep all your pensions in one place, as changing jobs can leave savers with several different pots and it can be difficult to keep track of them.
Putting all your pensions in one place may also reduce the fees you pay, as different schemes come with different charges.
You might also just decide to swap your pension from one provider to another to lower your costs.
Older schemes tend to have higher fees, so transferring old pensions to a new scheme could reduce the charges you pay.
Before you make the switch, make sure you check it’s the right move for you as some may lose valuable benefits by consolidating.
Could you get compensation if your pension transfer is delayed?
If you feel your pension provider or financial adviser are taking too long to transfer your pension, complain to them directly.
As it stands, providers are permitted to take as long as six months to complete a pension transfer request.
Say you’re making a formal complaint and provide any evidence to back up your claim, such as when you first asked to transfer and any correspondence since then.
You can then complain to the Financial Ombudsman Service (FOS) if you aren’t satisfied with the outcome.
The FOS manages disputes between financial firms and customers, and if it upholds your complaint it will ask the firm to compensate you.
According to the FOS, unnecessarily long delays that cost you money are a legitimate reason for complaining.
However, you must complain within six months of receiving a final response from your provider.
