DB providers lag on administration with months-long info delays

While DB providers are continuing to improve their response time, those at the bottom of the league table are taking even longer to provide basic information, according to analysis by Portafina.

The really telling statistic is the difference in delivery times between DB and DC administrators

Dan Taylor, Trafalgar House

The pensions advice specialist’s service times list benchmarks the time taken by different pension schemes to provide the basic information necessary to advise clients on areas like pension freedoms.

Its research covers 11,431 requests for information made by Portafina on behalf of 5,523 new clients to over 650 different DB and DC providers and administrators.

Royal Mail's pension plan was listed as the slowest DB scheme, taking an average of five months to provide information – 12 weeks slower than the scheme’s 2017 performance.

However, the company disputed the findings. ""We don't recognise these figures. Our own records show that all cases in 2017-18 and 2018-19 (year to date) have been completed within the statutory 13-week timescale. The typical response time is actually much shorter," said a spokesperson.

Portafina said the timescales are the average of how many weeks it takes in total to receive sufficient information from each scheme provider or administrator in order to be in a position to correctly advise a new client.

This is based on the adviser’s own records from the date of sending the initial request for information – with a signed letter of authority from the client – to the date whereby all the information they requested has been fulfilled.

Lack of resources slows down councils

Some of the slowest DB providers were local councils. Staffordshire County Council took an average of 17.2 weeks, while Peninsula Pensions – provided by Devon County Council and a shared service with Somerset County Council – took an average of 14 weeks.

Bob Stark, Portafina’s commercial director, said that for many local councils, slower responses are due to “a straightforward lack of resource – it simply isn’t very high on the councils’ budget plans”.

Equitable Life Assurance Society was listed as the slowest DC provider, taking an average of 7.5 weeks to provide information. TPT Retirement Solutions and Mercer came second and third with slow average times of 5.4 weeks and 5.1 weeks respectively.

A spokesperson for Mercer said: “It’s worth noting that our workload is dominated by transfers out of occupational pension schemes, which require specific considerations are taken into account such as pension scam checking, to ensure transfers are settled appropriately, rather than other types of arrangements. Also, investment/disinvestment trading cycles agreed between trustees and investment managers are likely to be longer than those offered by insurance companies/platform providers, for example, and are beyond the control of an administrator.”

The spokesperson added that the survey is based on just 26 of over 11,000 transfer-out settlements made by Mercer in the 12 months to November 2018, “which does not necessarily allow for meaningful comparisons to be made”.

Hargreaves Lansdown topped the list for speediest DC schemes, with an average 1.4 weeks taken to provide information – having improved its position as third fastest in 2017.

Canada Life and Scottish Widows came joint second fastest with an average of 1.7 weeks.

Legal & General’s scheme was the fastest in the DB category, with a 1.5-week average, and TPT Retirement Solutions came second in the DB scheme results.

Stark difference between DB and DC delivery times

Daniel Taylor, director at Trafalgar House, said: "The really telling statistic is the difference in delivery times between DB and DC administrators.

“This speaks volumes for the relative complexity of providing data and information for these two benefit types. Basic data and projections should be universally accessible for DC arrangements at the press of a button. DB, on the other hand, can often be a more manual process, especially if there are referral protocols in place for high-value liabilities.”

He also highlighted that most schemes are going through guaranteed minimum pension reconciliation and equalisation processes, meaning the underlying liability data could still require some manipulation before information can be provided.

“For most schemes, providing DB information is still not a press-of-the-button exercise,” he said.

Taylor noted that to help streamline the type of information that companies like Portafina are looking for, more schemes are opting for online solutions.

“Providing access to online modellers, scheme booklets and factors can often provide much of the information advisers need, removing some of the burden from administrators,” he said.

However, he added that there is very little commonality in the range of questions advisers ask administrators, which can occasionally delay response times because each questionnaire is responded to individually. “This is one area where most administrators are looking to establish more common standards,” he said.

Unusually long timescales

Girish Menezes, board director at the Pensions and Administration Standards Association, said DB and DC provider timescales evidenced by the data “are definitely unusually slow".

He added: “DC data really should be clean, clear, up to date. You really shouldn’t take seven and a half weeks or five weeks to get back – but even for DB to take 15 to 20 weeks to get back sounds unusually long.”

In general, to address delays, providers could look at whether slow response times are down to resourcing issues, and whether data need to be digitised, Menezes said.

Equitable Life, The Pensions Trust, Staffordshire County Council, Devon County Council, and Somerset County Council were unavailable for comment by publication time.