UK mutual Royal London has appealed to The Pensions Regulator to look at streamlining the DB to DC transfer process.

Following initial concerns voiced by advisory firm Rathmore Financial, both companies are concerned with the increasing number of incidences where transfer value quotes provided by DB pension schemes have lapsed before members are prepared to proceed with the transfer. As a result a new quote is then necessary, usually costing several hundred pounds and with no guarantee that it will match the original estimate.

Rathmore chartered financial planner Floyd Fombo noted that there is also an issue with the current three month validity of a Cash Equivalent Transfer Value as it does not allow time for all necessary information to be collected and for full advice to be given.

Factors causing delays in the process include delays in scheme members contacting advisers after receiving a quote, pension schemes providing insufficient information to enable transfer value analysis to be undertaken, and the need for advisory firms to ensure that any advice provided is rigorously checked.

Royal London policy director Steve Webb has now taken up the issue with The Pensions Regulator. Webb has requested that the regulator looks at whether the transfer process can be streamlined, for example requiring schemes to provide more information when the transfer value quotation is given. This could result in advisers being held up less as they would not have to chase for additional information.

Fombo said: “In the 11 plus years that I have been involved with reviewing DB schemes, I have not once known a DB administrator to provide all the required information at first request, it is also rare to have this by the second, sometimes even third request.

“If any of the requested information is missing, we cannot accurately complete a TVAS, and as such this will result in incorrect critical yields being generated, which would mean we would be providing advice based on flawed numbers, putting both the client and the advisory firm at risk.”

Webb added: “It is deeply frustrating for scheme members and advisors when the process of providing advice on a transfer drags on, and particularly if a new quote has to be prepared. Whilst DB pension schemes are under pressure because of the volume of transfer requests, it would probably save them time in the long-run if they provided comprehensive information alongside the transfer value quotation, rather than have to keep replying to follow-up queries. I hope that The Pensions Regulator will look closely at how to speed this process up”.

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