Pension advisers report transfers more popular than ever.

pension advisers
pension advisers

Article by Phil

Pension Advisers report that the number of pension transfers increased by over 20% last year to more than 1.2 million transfers.

That’s according to data released by Origo who the biggest provider of pension transfer services in the UK are. They currently provide the transfer processing for 95% of the market, working with over 150 different pension companies. The transfers moved over £53 billion in pensions from one provider to another. This is a huge level of pension consolidation and one which the markets didn’t predict.

People are clearly getting the message and talking to pension advisers about how to consolidate their pensions into one place.

The average transfer time has also reduced to an average of 13.6 days. Although Origo says that many simple transfers go through in less than 7 working days. But some pension providers don’t meet these averages. In particular LV, People’s Pension and Vanguard are all taking over 20 days on average. LV being the worst at 25 days.

Some others include Clerical Medical at 7.7 days, MetLife at 6.2 days, Aviva at 9.6, Royal London at 13.1 and Prudential at 13.0 days.

One issue that does delay pension transfers and the whole process of pension advice, is the requirement for written Letters of Authority. These are still an industry wide requirement and cause huge delays in processing times. First clients have to physically sign the authority in the first place, then they have to logged, then sent to the pension office, logged in there and finally put into a queue for processing. All of which can add weeks if not months to the process.

Many pension advisers are now calling on pension providers to come up with an electronic online solution to speed up processing times.

On the topic of pension transfers. In the run up to the self-assessment deadline on 31st January, advisers are warning clients to make sure that they are claiming the maximum tax relief on their pensions. It’s estimated that people could be missing out on as much as £120,000 in pension benefits by not claiming the right amount of relief. Many people assume that tax relief is automatically applied. But it needs to be claimed. Although claims can be back dated for four years.

The advice is even more relevant this year with more taxpayers falling into the higher tax brackets. Up 30 million more people will be paying higher rate tax by 2028.

Pension advisers have reported a 50% uplift in enquiries around the new pension tax reliefs and changes to the Lifetime Allowance.

But it’s unlikely that pension advisers will be able to reach everyone. Some simply don’t want any help. As we’ve seen before, the Canada Life “state of Flux” report found that:

  • 23% said they would never get financial advice. Even if it was free.
  • 11% don’t trust financial advisers. Which means that 90% of people do thank fully.
  • But 12% said they wish they had seen a pension adviser in the past. Once it’s too late.
  • In total 45% of people in the UK have never seen a financial adviser.

Many people wish they had talked to an adviser though. With 30% saying that they had underestimated the effect of inflation on their savings and investments.

All of this will have an effect on your retirement plans depending on when you want to retire. According to research by Flagstone, the current expected retirement ages in the UK are as follows:

  • Under 55 – only 1%
  • Between 55 and 59 – only 5%
  • 60 to 64 – 20%
  • 65 – 69 – 58%
  • 70 – 74 – 12%
  • 75 and over – 4%

Which bracket are you in? Or which do you think that you’re in because research from HL Savings found that 30% of high earners were not on track to have a comfortable retirement. Despite having high household incomes currently, many could find themselves with a moderate retirement income. Defined as £34,000 a year for a couple.

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