Transfers that should take days are being routinely delayed, eroding trust and exposing serious flaws in the industry’s infrastructure, experts say
Savers are being let down by a “dysfunctional” pension switching system that can trap people in limbo for months, or even years, according to a new report.
Pension transfers involve moving your pot or accumulated retirement savings from one provider to another, which often happens when you change jobs or look for a better investment opportunity.
A new report by online pension provider Pensionbee and financial consultancy The Lang Cat says transfers that should take days are routinely delayed, eroding trust and exposing serious flaws in the industry’s infrastructure.
It found that while some pension transfers take less than a week, others can take longer. One case took more than 1,000 days to complete.
When pension switches are delayed, people may miss out on lower-cost options, better investment opportunities or a more suitable pension provider.
A key reason for delays is outdated systems, some of which are still paper based. These transfers can routinely take over 30 days, whereas electronic transfers usually take around 12.5 days.
Anti-fraud checks and a lack of industry standardisation are also blamed for the delays.
In response, PensionBee is calling for urgent reform, including a legally enforced 10-day pension switch guarantee to protect savers and restore confidence.
Lisa Picardo, chief business officer UK at PensionBee, said: “The evidence is clear: delays are harming consumers and undermining trust in our industry.
“The system is letting poor performers off the hook and rewarding the wrong behaviours. The technology and standards exist to support more efficient pension transfers.
“The will among advisers and consumers exists to see change. What’s missing is meaningful legislation and regulatory enforcement.”
‘Potentially in breach’ of FCA rules
These delays, PensionBee warns, may be “potentially in breach of the Financial Conduct Authority’s (FCA) Consumer Duty” by stopping people from accessing better products and good outcomes.
Steve Nelson, insight director at The Lang Cat, said: “What gets measured gets done, and it’s clear the financial services sector urgently needs to measure and fix the systemic inefficiencies around pension switches that are damaging trust across the board.
“The delays evident from this research aren’t just frustrating admin issues. They’re symptomatic of a wider dysfunction rooted in antiquated manual processes.”
A tale of two systems
The data suggests that faster switching is already possible, but not widespread. While some firms complete transfers in under 10 days, the worst performers take much longer, averaging 66.4 days in 2024.
Ms Picardo said: “Swift switching isn’t a ‘nice to have’ – it should be a basic right.”
The report also raises concerns over scam prevention protocols.
It claims the Amber and Red Flag process – a system meant to prevent scams – is being “misused to create unnecessary delays.”
It calls on the FCA and The Pensions Regulator (TPR) to support a full overhaul, backed by service standards, penalties, and transparency.
Industry overwhelmingly backs reform
Frustration within the industry is near-universal, with some 97 per cent of advisers believing customers should be compensated when delays occur.
Some 96 per cent back legal reform to enforce switching timeframes, while 74 per cent want a standardised process across all pension providers.
Mr Nelson added: “If we want to build trust with the public and close the savings and pensions gaps, the whole industry needs to up its game and be held accountable.
“It needs to modernise systems and start acting with a shared sense of urgency and responsibility. The advice profession has spoken clearly in this research. Now it’s time for those who are able to make a difference to listen and step up.”
A DWP spokesperson said: “Transfer rules help to protect people from fraudsters trying to trick them into moving their pension pots into scam accounts, and the rules are estimated to have prevented around 2,000 fraudulent transfers.
“These rules must strike the right balance between providing the necessary protection for pension savers against scams, while ensuring they still have freedom and choice about where their savings are invested.”
An FCA Spokesperson said: “We expect providers to process transfers in a timely fashion, while carrying out proper checks, protecting against scams, and supporting customers to make informed decisions.”
