St James’s Place, Mercer and Towers Watson accused of being ‘slow on pension enquiries’

clockMercer, Towers Watson and St James’s Place have been highlighted as being amongst the slowest pension administrators at replying to requests for information on exercising pension freedoms, according to research from Portafina. But Mercer and Willis Towers Watson have attacked the research as having a small sample size and accused it of using the same benchmark to compare contract-based and trust-based pensions, when assets are held differently in the two different formats.

Portafina’s 2016 league table of pension provider service times found Halifax is the fastest to provide information on DC schemes, with enquiries taking an average of 1.2 weeks. BlackRock and Now: Pensions were also quick to respond to DC enquiries, with a response time of 1.6 and 1.7 weeks respectively. Slowest in the DC space were St James’s Place, which took an average of 4.3 weeks to respond, followed by Towers Watson and Friends Provident, both taking 3.7 per cent.

For DB schemes, First UK Bus Pension was slowest to respond, taking an average of 10 weeks, followed by three local authorities. Mercer was fifth slowest, with an average 8-week turnaround time for information. Fastest was Royal Bank of Scotland, with a 1.4 week response time, followed by Diageo Pensions, which responded on average in 1.8 weeks.

But Mercer has challenged the findings, saying the sample size is relatively small, and the report does not take into account security issues around pension liberation or the fact certain clients hold assets such as property funds that have only one day per month dealing.Mercer’s retirement administration business has just received ISO 9001:20015 accreditation which helps organisations demonstrate to customers and regulators that they offer products and services of consistently good quality supported by a high standard of internal processes and controls.

Willis Towers Watson says the trust-based cases it deals with are slower to process because, unlike contract-based arrangements, it does not have direct access to or control of the assets.

The Portafina analysis covers 9,137 requests for information made by Portafina on behalf of 6,423 clients to over 700 different defined contribution and defined benefit pension scheme providers, in the period 1 Oct 2015 to 30 Sep 2016.

Portafina managing director Jamie Smith-Thompson says: “I am not surprised to see Halifax topping the tables again as it is one of the few companies we never have to chase. It is great to see that it takes customer service so seriously and that it is so consistent. Overall we have seen a steady improvement in timescales from 2015 but I think there is a long way to go before the majority of providers are matching customer expectations, in what is now a very connected world.

“Last year’s slowest DC scheme provider, the government’s Nest scheme, has improved significantly in 2016 to mid-table respectability by dropping average times from 5 weeks to 3.2 weeks.

“We received a very positive response to the results of our 2015 tables from Nest and it is great to see that it has made such an improvement.

“These timescales really matter to the client, especially when you consider that a similar amount of time is generally required to administer any transfer. That means that for some schemes a client can have everything sorted within a few weeks whilst for others it can mean four months or more of delays simply waiting on their provider. Understandably that can be both frustrating and potentially damaging to the client’s plans.”

A Mercer spokesperson says: “We have not seen the full data behind these findings but understand the sample groups here to average 12 members per scheme. This is very small considering that Mercer administer the pensions of around 1 million people in the UK and our concern is that the data may paint an overly simplistic view of a process which is dependent on each member’s individual circumstances.

“For example, a member may have AVCs invested in a property fund which only has one dealing day a month when assets can be accessed or it may be that the documentation needed to complete a transfer has been returned to us by the member incomplete.  These are only two examples of factors that cause delays and are outside the control of administrators.

“It’s also worth bearing in mind that pension providers need to have stringent approaches to issues such as pension liberation, which can take time but is absolutely necessary as part of good governance. It is of paramount important to Mercer to protect individual members balanced against a desire not see any unnecessary delay.”

Willis Towers Watson head of UK pension administration Brendan Mooney says: “Willis Towers Watson deals with trust based occupational pension schemes where we do not have direct access to or control over the invested assets. These are held by third party investment managers and our environment, as for all third party administration providers, means that cases may take longer to process than with, for example, an insured contract.

“We would also add that our transfer procedures ensure full compliance with the Pensions Regulator and FCA guidelines on protecting members from pension scams. This means we carry out member identity verification procedures, reviews of the receiving arrangement HMRC approval status and checks on the provision of the necessary financial advice to the scheme member. These steps are taken in order to ensure that the member and scheme trustees are protected from the risk of scams and also the risk of unexpected tax charges that can represent up to 95% of the transfer value paid when classed by HMRC as an ‘unauthorised payment’. These checks and liaison with third parties such as HMRC inevitably add time to case processing. However, this is done for the benefit and protection of the scheme members and our pension scheme trustee clients.

“Our comments are generic as we do not have any detail on the research that has been completed and we are not aware of the data or sample cases used to produce the results shown. We do not contribute to this research and cannot comment upon its accuracy.”

2016 results for defined contribution schemes:

Fastest DC schemes based on average number of weeks to provide information

Halifax                                                 1.2 weeks                     (Also fastest in 2015)

Guardian Financial Services               1.5 weeks

NPI                                                       1.6 weeks

Black Rock                                          1.6 weeks

Now Pensions                                      1.7 weeks

Slowest DC Schemes based on average number of weeks to provide information

St James’ Place                                   4.3 weeks                     (5th slowest in 2015)

Towers Watson                                   3.7 weeks

Friends Provident                                3.7 weeks

Capita                                                 3.3 weeks

Reliance Mutual                                  3.3 weeks

Defined benefit schemes

Fastest DB Schemes based on average number of weeks to provide information

Royal Bank of Scotland                      1.4 weeks                     (New entry for 2016)

Diageo Pensions                                 1.8 weeks

DHL Group Retirement Plan                2.1 weeks

Social Housing Pension Scheme         2.3 weeks

Legal & General                                  2.3 weeks

Slowest DB Schemes based on average number of weeks to provide information

First UK Bus Pension                           10.0 weeks                  (Also slowest in 2015)

Durham County Council                     9.2 weeks

Strathclyde Pension                            8.8 weeks

Hampshire County Council                 8.2 weeks

Mercer Ltd                                           8.0 weeks