PensionBee discovered that only 26% of consumers found switching their pension provider easy, compared to 73% when it comes to home or contents insurance and 69% for energy providers. Difficulty transferring drives lower engagement with consumers, as more than a third of respondents (35%) report never having tried to change pension providers. This is compared to only 10% when it comes to both home or contents insurance, and energy providers.
Although pensions can be transferred electronically using a system called Origo Options, many providers still use paper-based transfer processes. The average switching time for electronic pension transfers is 12.5 days, in comparison to 34.4 days for paper-based transfer providers.
A 34.4 day average transfer time for paper-based providers is higher than the average transfer times of other essential services. Regulation requires that mobile phone contract switches must be completed in one day and bank account transfers require a saver’s current account and direct debits to be fully transferred within seven days of the request. While OFCOM rules and the Current Account Switch Guarantee have removed barriers to switching in these industries, outdated pensions legislation from 1993 currently permits pension providers to take up to six months to transfer a pension.
Only about 1 in 5 respondents (21%) feel very satisfied with the service from their pension provider, compared to 36% for current account and mobile phone providers, two essential services which guarantee switching in a week or less.
Clare Reilly, Chief Engagement Officer at PensionBee, comments: “While Auto-Enrolment has successfully brought millions of people into the pensions system, archaic pensions legislation keeps them stuck in 1993. Pensions urgently need basic consumer switching rights, like we see in other essential services and utilities. These switching rights will raise consumer power, effective competition, and help drive better engagement with pension saving. We call upon the government to legislate a 10-day pension switch guarantee.
At PensionBee, we’ve seen firsthand that customers appreciate simplicity and responsive customer service, qualities enabled by digital technology. In this day and age, no consumer should be put off switching providers due to lengthy transfer processes, paper and post. The technology to simplify pensions exists, and all providers must use it, giving consumers the ability to select the best plan for them so that everyone can look forward to a happy retirement.”
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