Driving improvement in DC transfers

John O’Hara, Chair of the PASA DC Working Group and Programme Manager, Origo, explains why PASA has established a DC Transfers Working Group, its remit and objectives.

PASA exists solely to promote and improve the quality of pensions administration services for UK pension schemes.

Transfers between Trust-Based DC schemes is a key, and growing, part of PASA’s remit. However, the time taken to process these transfers, and the processes followed, vary hugely, with a resulting detrimental impact on the service offered to consumers, and the trust placed in the Trust-Based DC community. Some of the key issues experienced are:

  • Some transfers can take months to complete
  • Processes followed can be lengthy and opaque
  • There is a perception schemes try to hold onto funds for as long as possible

It should come as no surprise PASA is announcing the formation of a DC Transfers Working Group, with a key objective of driving improvement in this area. This will enable fast and risk-appropriate processing of Trust-Based DC transfers, across the whole spectrum of UK Trust-Based schemes, irrespective of size, contribution status and administration model.                            

The purpose of the PASA DC Transfers Working Group is to:

  • Identify the barriers to faster and lower risk transfer processing
  • Find ways to reduce or eliminate these barriers
  • Help PASA members understand STAR reporting requirements
  • Define the difference between ‘standard’ and ‘non-standard’ transfers
  • Set out ways in which an appropriate balance between speed and risk can be struck
  • Set out good standards for all administrators to follow when processing DC transfers
  • Publish guidance and information that helps to eliminate transfer delays
  • Provide a challenge to the Trust-Based DC community to improve its transfer processing

The group will use its skills, expertise and research to draft Guidance and present its recommendations to the PASA Board for consideration and approval for publication.

The working group will report to the PASA Board, and its scope will cover transfers between DC to DC arrangements; to Trust and Contract-based schemes, both UK and overseas:

  • UK Trust-Based DC schemes of all sizes
  • Schemes open or closed to contributions and/or new members
  • All types of administrative provision e.g. in house, TPA, master trust, insurer
  • DC schemes with a DB underpin are excluded from the scope

The primary deliverables of the working group are:

  • Good practice standards for communicating and processing firstly straightforward transactions, followed by complex transactions
  • Specific recommendations as to how these processing standards could be achieved
  • A guide to transfers for use by administrators and others.

The work of the group will be phased, with deliverables for straightforward transfers delivered in advance of those for complex transfers. There will, though, be commonality in terms of the deliverables, with the following delivered for each:

  • Definitions of straightforward and complex transfers
  • A recommended process mapping out the transfer process from receipt of a request for a transfer value quotation from a member or representative (a request where some intervention is needed from the administrator and not a self-service automated request)
  • A clear process setting out the key steps in the transfers settlement process, from receipt of a valid member request for a transfer to proceed, including signposting to other industry guidance to aid completion of the process
  • A standard transfer information template for common use by administrators and member advisers
  • Good practice examples for all stages in the transfer process from receipt of a transfer value quotation request from a member or their representative.

I am looking forward to chairing the Working group, which will bring together expertise from across the industry, working in co-operation to help effect positive change in this important area of administration.

John O’Hara, Chair of the PASA DC Transfers Working Group and Programme Manager at Origo, PASA Experts for Transfers