The boss of fintech firm PensionBee has called on the government and regulators to clamp down on “rogue providers” preventing the transfer of pension pots today, as ministers prepare to assess the impact of freedoms granted to retirement savers seven years ago.
Pensions minister Guy Opperman is set to speak at a select committee hearing tomorrow on the impact of the pension freedoms, which were introduced in 2015 with the aim of giving people aged over 55 more control over how they could access their savings.
But Romi Savova said that the impact of the freedoms has been stifled by providers including the People’s Pension, Railpen and Cushon, dragging their feet and preventing savers from transferring their pension pot.
“With freedom must come choice,” she told City A.M. “And the reality is that pension providers are standing in the way of consumers exercising choice and taking ownership of their pensions – which we desperately need.”
She added that her question to the minister would what steps the Department for Work and Pensions is taking to ensure that “transfers for ordinary defined contribution pensions can proceed in an ordinary way, routine way”.
The comments from Savova come after it was revealed she had written to ministers in May to demand ministers and the Pensions Regulator clamp down on providers “delaying and blocking transfers” of pension pots.
A group of providers have reportedly prevented the transfer of schemes to PensionBee over its refer-a-friend scheme, which had raised a red flag for the providers.
The list of firms named by Savova included Mercer, Railpen, First Actuarial, HS Pensions / Salvus Master Trust, Cushon, The Workers Pension Trust and XPS Pensions.
A spokesperson for Railpen said its approach “ensures we are acting in accordance with regulations whilst providing greater protection for members”.
“It includes additional steps to ensure members are aware of the risks of transferring and checklists to help us identify any flags which might cause concerns over scams,” the spokesperson said.
Cushon said it “strongly disagreed” with the suggestions, claiming that its legal advisers have instructed it “that PensionBee’s “refer a friend” scheme constitutes an incentive which means that we cannot permit a statutory transfer”.
A B&CE/People’s Pension spokesperson said that its “lawyers have instructed that some of PensionBee’s marketing initiatives fall outside of the new regulations” and the regulations broad reference to ‘incentives’ means that any transfer which has been incentivised cannot proceed as a statutory transfer.
In a joint statement today, the Department for Work and Pensions and Pensions Regulator said “the regulations are not intended to impose additional burdens on schemes or administrators, or to impact on standard business practices. Likewise, they are not designed to offer protection against normal market volatility.”
In a letter responding to Savova, minister Guy Opperman said in May the department had begun “gathering data” to conduct a review of the regulations with the intention to publish a report in the Spring of 2023.