With the first auto-enrolment staging dates now over a decade in the past, many employers may now look at their current pension provider and decide that they are no longer the right fit for them.
Our latest insight article looks at the process for moving providers, and which workplace pension providers make it easier than others.
A lot can happen at a company in ten years. What used to be small local enterprise can have grown to a large firm with multiple offices in different territories and a much more varied workforce. Likewise, what an employer wanted from a pension ten years ago, may not be what they, or their employees want now. Was digital advice or financial wellbeing packages a thing back then?
But what is the process for moving providers? And which providers make it easy for the employer to transfer their scheme to them? Once an employer has decided to move workplace pension provider there are a few simple steps to follow.
Firstly, the employer needs to identify a new provider and begin the process of signing up to their services. The process which firms take to carry out provider selection will vary depending on the firm, or in some cases the individual. Most will use the services of financial adviser, but not all will have the luxury.
There are various tools and software to assist advisers with this, but many advice firms will have a chosen panel of providers of whom they have already carried out due diligence on and are happy to recommend. This is its simplest form might be a low cost ‘basic’ offering, a middle of road solution and a more sophisticated or complex solution.
Secondly, the employer needs to inform their current workplace pension provider they intend to switch. This could a dauting and time-consuming task for larger employers. Employers, and indeed advisers should always check what support and help the existing and new scheme providers can offer with this process.
The physical process of switching provider is carried out between the two workplace pension providers directly and little or no input from the adviser or employer should be required. The existing and new provider should both keep the employer and ideally the adviser up to date on this process, and any issues or hold ups should be communicated and they should provide a projected timeline for completion of the switch at the start of the process.
However, our data shows that some workplace pension providers make the process easier for employer than others.
All workplace pension providers will accept transfers in and have stated that they all have a simplified application and process for transfers into a replacement scheme.
However some providers make the process harder for the provider who the scheme is being transferred to than others. It will interesting how the new Consumer Duty rules might change this.
Our data shows that other than Fidelity, Hargreaves Lansdown, Royal London and True Potential, all workplace pension providers require the previous scheme to transfer existing member and scheme data electronically in bulk.
Fidelity is also the only provider who have put a time limit on when the transfer can take place after joining the replacement scheme.
All providers allow scheme and members data to be uploaded securely via a web transfer. The previous scheme or the employer can upload information on the transfer amount, client data, contract data, and ancillary benefits.
However Legal & General, Standard Life and True Potential require further data that needs to be entered manually.
Legal & General require the employer to manually enter fund choice data. Standard Life and True Potential request that the previous provider enter more data manually.
Legal & General are also the only provider who do not automatically load transferred data onto their mainframe system.
Whilst all providers offer a bulk transfer service where an employer is looking to move an additional block of members to an existing scheme, Hargreaves Lansdown, Mercer Master Trust Scottish Widows, Royal London, Scottish Widows and Standard Life explicitly require a signature for each transfer.
True Potential also only offer the bulk transfer process for transfers in.
All workplace pension providers have a dedicated team to support transfers, which should really come as no surprise.
Most also offer electronic tracking for transfers, with only Legal & General, Mercer Master Trust Scottish Widows, Scottish Widows and Standard Life not offering this. These providers have stated that they currently have no plans to start offering electronic tracking in the future.
The pensions on offer by Aviva and Mercer Master Trust Aviva will proactively push electronic tracking updates to the adviser on a case by case basis as the status changes. A service which will no doubt be very welcomed.
When it comes to what information can be tracked electronically on transfers, different providers offer different updates.
Chart: What status information is provided electronically on transfers
Other than True Potential, all workplace pension providers offer an asset transfer service to mitigate any out of market risk. Other than Hargreaves Lansdown and Royal London, they can also offer pre-investment.
It is also important not to forget to inform employees as early in the process as possible that the workplace pension provider is changing and keep them up to date through the process with any changes or developments they need to know about.
Some workplace pension providers will also require individual letters of authority from members of the scheme in order to complete the transfer. These providers are Aviva, Fidelity, Hargreaves Lansdown, Mercer Master Trust Aviva, Scottish Widows and Standard Life.
When carrying out a transfer all workplace pension providers state that they can accept electronic signatures for both transfers in and transfers out. DocuSign is the most commonly used electronic signature process with over half of providers using DocuSign for both transfers in and out.
Graph: Number of electronic signature processes currently used
Based on the data gathered, it is clear that pension providers all have different ways in which they operate and different ways in which they support both employers and advisers through the process of moving scheme.