Some of the UK’s largest master trusts have launched a collaboration aimed at cutting the time it takes to transfer defined contribution (DC) pension pots between providers.
Providers including Nest, the People’s Pension, Smart Pension, and Now Pension have established Pathfinder, a working group that will explore “practical ways to improve pension transfers for savers and support a more scalable transfer process”, according to a press release.
The group is actively seeking new members to support innovation in pension transfers, including the use of new technologies such as automation and common data standards
The move comes ahead of new rules, contained in the Pension Schemes Act, that will pave the way for automatic consolidation of dormant small pots. It also anticipates an increase in transfer activity when the MoneyHelper Pensions Dashboard becomes available to the public, expected in the 2027-28 financial year.
In Depth: 40% of master trust memberships could consolidate, study finds
A long-term study published last year identified that around two in five master trust memberships could be consolidated, demonstrating the scale of the small pots issue.
The Pensions Policy Institute (PPI) worked with Nest, Smart, People’s, Now Pension and Legal & General on the five-year study, the results of which were made public in February 2025.
In this article for Pensions Expert, Nick Reeve delves into the Pensions Data Project, which analysed more than 76 million individual records from the five master trusts.
Global transfer standards come to UK pensions
In April, two UK master trusts completed a transfer using “open standards” – specifically, ISO 20022 messaging over the SWIFT network. This is a transfer system used worldwide to transfer cash and assets and already powers ISA transfers, among other areas.
The statement said the Pathfinder members aimed to modernise transfer infrastructure by reviewing current practices, exploring alternative options, and sharing ideas.
“We want to ensure improvements to the transfer process focus not only on improving efficiency but on helping members to make the right choices.”
Gavin Perera-Betts, Nest
“Many pension transfers today still involve paper-based, manual processes, creating avoidable friction, increasing operational costs, and poor tracking or audit trails,” the press release said.
The successful SWIFT test “demonstrates the potential for fully automated transfers to be processed at materially lower costs than traditional processing, while maintaining secure and auditable exchange between participating organisations”.
Angela Staral, chief operating officer at People’s Pension, described the Pathfinder project as “a promising first step” to improving transfers.
She added: “It is important to recognise that transferring a pension is fundamentally different from switching bank accounts, as the decisions made can have long-term implications for retirement outcomes. That said, once savers have made an informed choice, the process itself should be as simple and efficient as possible.”
Balancing speed and security
Recent research by technology firm Origo found that the average transfer time for simple transactions fell to 10 days last year. However, many processes are still paper-based and manual, meaning more complex cases can take much longer.
DC consolidator PensionBee has been calling for legal limits on the time it can take for pensions to be transferred to reduce unnecessary delays.
Gavin Perera-Betts, chief customer officer at Nest, emphasised the need to balance efficiency with security, explaining: “Our members’ pension savings are one of their most significant financial assets, so we want to ensure improvements to the transfer process focus not only on improving efficiency but on helping members to make the right choices, as well as protecting them from fraud and unauthorised access.”
Sue Whittington, chief operating officer at Smart Pension, said: “Master trusts need transfer processes that match the scale and expectations of today’s market and the significant rise in transfers on the horizon.
“Pathfinder has shown that open standards can work through a live transfer, with further transfers already underway. It has also shown that there is a way to improve the transfer process by better supporting saver engagement with increased transparency and completion rates.”
