In our latest insight we look in depth at the pension transfer process for workplace pension providers.
The average Briton changes employer every five years, according to recent research from life insurer LV=. As members will often chose to leave their old employer’s workplace pension scheme when they move jobs in favour of that of their new employer or a private scheme, if a member simply joined the new scheme each time they moved employer without transferring funds from their previous workplace pension they would likely have ten separate pension pots by the time they retired.
The good news is that our data shows all workplace pension providers accept transfers in from existing workplace pensions. Most providers also have no minimum transfer amount, however Standard Life will only accept transfers with a value of over £1,000. And all providers have a simplified application process for transfers into a replacement scheme.
Other than for Royal London, pension scheme members can apply to transfer online. However, Fidelity, Hargreaves Lansdown, Legal & General, Mercer Master Trust Scottish Widows, Scottish Widows and True Potential will require members to complete a separate application form to affect the transfer.
Other than for Fidelity, there is no time limit on when the transfer can take place after joining the replacement scheme.
Almost three quarters (74%) of providers require the previous scheme to transfer existing scheme/member data electronically in bulk and all enable data to be uploaded securely via a web transfer.
Legal & General, Aviva Designer, Standard Life and True Potential require further data to be entered manually. All providers can supply the previous scheme with a template transfer spreadsheet for the submission of data.
Our data shows that all workplace pension providers offer a bulk transfer service. Hargreaves Lansdown, Royal London, Scottish Widows, Scottish Widows GSIPP, Standard Life, Standard Life DC Master Trust and True Potential will explicitly require a signature for each transfer. True Potential limits its bulk transfer service to transfers in only. However, Mercer Master Trust Scottish Widows, Scottish Widows, Scottish Widows GSIPP and Scottish Widows Master Trust restrict this bulk transfer service to transfers from DC schemes only.
For bulk transfers; Aviva Designer, Aviva My Money, Aviva My Money Master Trust, Fidelity, Hargreaves Lansdown, Mercer Master Trust Aviva, Scottish Widows, Scottish Widows GSIPP and Standard Life require individual letters of authority from members of the scheme.
For members transferring with Fidelity and Hargreaves Lansdown, a separate policy is created for the transfer process.
It is also worth noting that for members transferring with Aviva Designer, Aviva My Money, Aviva My Money Master Trust, Fidelity, Fidelity Master Trust, Legal & General, Legal & General Master Trust, Mercer Master Trust Aviva, Royal London, Standard Life, Standard Life DC Master Trust and True Potential can see different product terms apply to the transfers compared to the main scheme benefits.
Our data also shows that during the transfer process, for just under half (47%) of transfers the member is not invested at some point during the process. The providers where this happens are Aegon Workplace ARC, Aviva Designer, Aviva My Money, Aviva My Money Master Trust, Hargreaves Lansdown, Mercer Master Trust Aviva, Standard Life, Standard Life DC Master Trust, and True Potential. However, other than for True Potential the investment will be backdated to ‘as at’ the date which they received the funds.
Other than True Potential, all workplace pension providers offer an asset transfer service to mitigate out of market risk. Only Hargreaves Lansdown and Royal London cannot offer pre investment. Aviva Designer, Legal & General, and Legal & General Master Trust offer this on a manual basis.
Aegon Workplace ARC, Aviva My Money, Aviva My Money Master Trust, Mercer Master Trust Aviva, Standard Life and Standard Life DC Master Trust offer this on an electronic basis.
Aegon Master Trust, Fidelity, Fidelity Master Trust, Mercer Master Trust Scottish Widows, Scottish Widows, Scottish Widows GSIPP, and Scottish Widows Master Trust can do it either way.
In-specie transfers are also widely supported with only Aegon Workplace ARC and Royal London not offering this.
Electronic signatures are widely supported for pension transfers with only Mercer Master Trust Aviva, Standard Life and Standard Life DC Master Trust not supporting them for both transfers in and out of a scheme.
Typically, from start to finish, the time frame from transfer completion from receipt of discharge forms is between a week and three months.