46% of open market pension to annuity transfers under £20,000
Figures from Origo show that 46% of single pension pots that were transferred to annuities in 2013 using the Options Transfers Service were under £20,000.
Statistics gathered by the eCommerce and standards body to 30 December 2013 show that 24% of single pots transferred were under £10k, 11% were under £5k, and overall 80% were under £50k.
HMRC designates £18k as a small pension pot while the DWP has announced plans for automatic pot-follows-member for any pensions under £10k. As auto-enrolment beds in, the number of small pension pots requiring automatic transfer will increase substantially over the next few years, particularly as opt-out rates so far have been much lower than expected.
Origo Managing Director Paul Pettitt said: “The fast and efficient transfer of pension pots and assets is becoming a growing issue for the pensions industry and it is set to increase as pot-follows-member plans are developed and volumes increase under Auto Enrolment rules. While much of the DWP’s attention to date has been on the sign-up process for auto enrolment, it is inevitable that the ability to transfer pensions securely, quickly and efficiently for the benefit of the consumer will become a key industry focus.
“A significant percentage of pension pot transfers remain under £20,000. While percentages for the past four years have remained roughly on a par, the volumes of pensions transfers carried out by the Options Transfers Service have increased substantially, by 42% in 2012 and by 60% in 2013, with the total value of transfers since the Service was launched in 2008 standing at over £40bn. This demonstrates the volume of smaller sized pots of pension savers’ money already being processed through the Options Transfers service quickly and efficiently.”
Pettitt added that since launch in 2008, Options has reduced the time taken from around 50 working days to an ‘across the board’ average of 9-10 calendar days (including holidays, weekends and the time required for BACS processing) with some transfers being processed within 45 minutes.
Origo said the Options Transfers Service serves 60 financial services brands including all the major annuity providers and processes c95% of the industry’s pension to annuity Open Market Options (OMO) transfers, based on market data supplied by Cazalet Research and analysis of Options statistics to end of December 2013.