A forecast surge in transfer volumes coupled with political pressure for speedier transfers will leave some administrators struggling.
But there are some industry developments that might yet bring some relief to both administrators and long-suffering scheme members.
The key driver of pension transfers over the next few years will be the pensions dashboard. Although the original launch date has been delayed, in our view, as a software developer to the programme, it is highly likely that the first public access will go ahead be in 2024, in spite of some dark commentary to the contrary from the market.
Compounding these problems is the disparate nature of the UK pensions industry with multiple regulators and sectors.
The dashboard when launched will for the first time allow individuals and their advisers to instantly see all their pension in one place. Although not a stated objective, it is generally accepted that this will trigger much demand for pension consolidation, creating a bow wave of pension transfers.
In many cases these transfers are likely to be from older corporate and public sector schemes – in other words, those schemes with the most antiquated transfer processes.
Looking further ahead, the Department for Work and Pensions has once again opened the lid on the small pots problem. The original programme was shelved following the 2015 election, but the proliferation of small pension pots has continued unabated and can no longer be ignored.
Having done another loop around all the potential solutions, the DWP has just completed a consultation exercise, and now seems likely to settle back where they started with Steve Webb’s preferred pot follows member solution.
Transfers too slow
On top of the rise in transfer volumes there is demand from everyone, from the pensions minister down, for much faster pension transfers – actually, I think it was the last pensions minister not the current one who wrote to the worst-offending administrators, but with all the ministerial hokey-cokey it is hard to keep track.
There is little patience left for transfers that take months and the expectation now is that administrators should aim for just a week or two.
However, transferring pensions is still beset with hazards.
We can never get all the disparate parts of the pension industry to buy the same system or run exactly the same process, but it might be possible to get them all to use the same interoperable standard.
Despite pressing for ever-faster transfers, the various regulators have launched a host of new regulations, in theory intended to safeguard members, but in practice unintentionally hampering much-needed process improvements.
