Consultants, Mercer and Willis Towers Watson (WTW), have defended their position in a new index, highlighting how long it takes companies to release funds to customers who are looking to switch retirement income providers.

The My Pension Expert (MPE) Retirement Fairness Index (RFI) launched today, 30 May 2018, found that it took Mercer 113 days on average and Willis Towers Watson 69 days on average to release funds to clients, costing customers £889.95 and £429.27, respectively.

By contrast, financial product provider Sanlam, which topped the charts, took 28 days on average to transfer its clients' funds.

However, the RFI is based on data collected between 1 October 2017 and 31 March 2018 from 973 clients, with an average fund size of £49,968, and Mercer has questioned the robustness of the research.

MPE executive chairman, Andrew Megson, said: "These delays in releasing funds to consumers are simply not acceptable. The monies caused by the delays can never be recovered. It’s hard to believe such practices have gone unchallenged for so long.

“As shocking as MPE’s research is, it acts as a much needed wake up call to the sector.
We intend to continue monitoring ceding companies and hold them to account. We will also be approaching the FCA with our findings and hope to work with them to ensure that the sector puts consumers first.”

Despite this, a Mercer spokesperson said: “Mercer is proud of the quality of our administration and we do not believe the league table provides an accurate reflection of Mercer’s performance compared to our peers.

“Given that Mercer’s workload is dominated by transfers out of occupational pension schemes rather than other types of arrangement, there are specific considerations to take into account, and processes that must be followed, to ensure transfers are settled appropriately.

“A survey based on just 17 of over 5,578 transfers administered by Mercer over the period of the research does not allow for meaningful comparisons to be made."

My Pensions Expert said that the RFI only included companies with a minimum of 10 completed deals “to create an accurate picture of what customers experience when they switch retirement income providers”.

Furthermore, the firm conceded that that Financial Conduct Authority regulations make it impossible for companies to release pension funds immediately.

WTW also questioned the accuracy of the index and said that defined benefit and trust-based defined contribution schemes can take longer to transfer than other DC schemes because of third-party asset holders and that many pension schemes do not hold electronic records for members entitlements.

In a statement WTW said: “Our transfer procedures comply with The Pensions Regulator and FCA guidelines on protecting members from pension scams. Although this can add time to the transfer process, more importantly, it protects members from such scams and both members and trustees from the risk of unexpected tax charges that can represent up to 95 per cent of the transfer value paid.

“Finally, we would make the observation that the measure should be applied between the date the transferring arrangement dis-invests a member’s assets to when the transfer payment is passed to the new provider. In this respect, WTW would normally be well within the 28 day timescale quoted below.

The index will continued to be published every quarter to hold “ceding companies to account for their negligence”.

Pensions Age also contacted Aegon, Capita, Zurich, LV but have not yet received responses.

Share Story: