Pensions Freedoms is the pebble creating waves for our industry. The ripple effect is altering not only the demand for certain types of pension products (goodbye annuities, hello SIPPs), but also the way individuals want to manage and access their pensions (please welcome the Pensions Dashboard).
The DB challenges
Since the introduction of Pensions Freedoms the question of ”how much do I have?” has never been asked more to DB schemes and administrators. The volume of requests for CETVs has been at some of its highest levels in recent months which has placed real pressure on admin teams and even the transfer process. As well as Freedoms, market conditions (high gilt yields), have compounded the issue adding yet more pressure to the process, making it more challenging to ensure member demands are met.
In a recent White Paper published by Origo, The Troubles with DB Transfers (August 2017), it was found that due to these extreme market conditions many organisations are using ”coping mechanisms” to overcome these administration pressures. The ever-increasing volumes however, mean these short-term solutions are incapable of keeping pace. In fact, one of our research participants went as far as to say that “the transfer process is expensive, time-consuming and probably an unprofitable task – which is a concern.”
A new world of saving
DB continues to play a key role in many retirement plans, but today we know that the average worker is estimated to have 11 jobs in their lifetime, so it’s likely we’ll see more and more individuals with more pots, and using a blend of savings vehicles (ISAs, DC, DB and more).
SIPPs appear to be gaining favour with individuals, as shown by stats from Origo’s Options Transfers service, with transfers to SIPPs up by 30% on 2016, and with a 39% increase in value. SIPPs now make up 51% of all transfers in conducted by the service (which is over 40,000 transfers each month).
This complex blend of savings and product types, coupled with the added pressure that members wish to quickly and simply move and/or consolidate pots, then access these savings, adds a whole new servicing and admin dimension. The need for administrators to facilitate the ease of movement between schemes, as well as secure and control that flow of data is critical, and if mishandled, could easily become troublesome for all parties, and harmful for the member.
Get the right support
Ensuring that you have the right processes and foundations in place to effectively manage the member data and information is key to sustaining good member outcomes. You need services that not only help to fulfil a gap in your process but also support your existing processes. At Origo, our role as the industry’s only not-forprofit FinTech company is to create, deliver and maintain services that support our industry throughout its growth and development.
For nearly 10 years, Origo has provided its Options Transfers service to the industry and since its launch it has successfully transferred over £130bn in pensions monies. It helps organisations, including administrators such as JLT and The People’s Pension, to transfer pensions between each other, providing full MI for reporting, and secure and controlled data transfers for a vast range of product and transfer types including; bulk schemes, SIPPs, DC pots, DB pots and many more.
For an organisation, enabling the controlled and swift exchange of member data via electronic transfers will help to ensure that you’re in full control of each and every transfer, and that you can report on any or all previous cases at the touch of a button. But, most importantly, you’ll have the foundations in place to support the retirement blend that members now need to ensure a comfortable retirement lifestyle.
By Anthony Rafferty
Managing Director – Origo