Pension freedoms require slick pension transfer technology
Behind the scenes technology often gets little recognition, yet without it the industry would not work even half as efficiently as it does. Paul Pettitt, managing director of Origo, looks at the Options Transfers service and its impact on consumers and the pensions industry
With the recent publication of the FCA paper on its pension freedoms data collection exercise and the deadline looming for responses to the Treasury’s pension transfers paper, the spotlight has never been more clearly focused on the pension transfer process. Pension freedoms are certainly, and rightly so, helping to ensure that for consumers, the processes around the transfer of pensions are indeed consumer-friendly.
For well over 7 years, transfers have been a particular focus for us. Building the process of open market option pension-to-annuity transfers was the starting point, quickly moving to pension-to-pension and then pension-to-drawdown transfers.
Occupational pensions are now included as well as re-registration of ISAs, GIAs and SIPPs – and just last month we launched our Bulk Transfers service, which is another step towards ensuring that nearly every kind of transfer needed by a consumer, whether implemented via a pension administrator, pension scheme, platform or provider, can be managed through Options.
The Options Transfers service has come a long way and to help put this into perspective:
• £70bn plus has been transferred since launch in 2008
• 50,000 transfers go through the system a month (and this has been growing quickly since April)
• 6 calendar days is the average time to complete a transfer – quite a fall from the average of 10 weeks experienced in the old manual world. Even better, some go through in as little as 45 minutes.
• 70 brands (owned by over 50 financial institutions) are now using the service.
It hasn’t all been plain sailing but there is no doubt that from the day it was set up as a not-for-profit organisation with a mandate to help financial services companies become more efficient, more cost effective and better able to serve the end consumer, Origo has been working for the benefit of the industry.
The recent recognition from the FCA for the good work Options has done further underlines the view of the service as an extremely positive force in the industry.
A key feature of the Options service is that the 70-plus companies signed up to it know they are operating within a trusted network of users. Origo leverages its customers’ market knowledge to ensure that for new joiners, its due diligence is second to none. We’re extra careful; this not only benefits Origo participants but also, importantly, means consumers are properly protected. Everyone is hugely concerned to ensure the industry is maximising its efforts to weed out ‘pension liberators’ and that’s why Origo takes its due diligence responsibilities seriously.
Working for the end consumer
Origo works collaboratively with financial institutions, including other industry bodies and stakeholders, to design, develop and implement standards and services in a way that ensures they do what they say on the tin.
The way we tackle our projects is this: Let’s put the customer first, and then use the best technology to deliver to the customer. For us, selecting and using a model that drives the best outcome for consumers, a model that is fit-for-purpose, cost effective, and actually delivers, simply makes sense.
For us, what doesn’t make sense, is putting together solutions with alternative technology that will only benefit technology suppliers and, more importantly is not fit-for-purpose, resulting in increased cost and additional complexities to financial institutions, a cost that, ultimately, the consumer has to pay.
Origo has a solid and unique position in the industry in that it was established in 1989 by 16 financial institutions, all quite different in their makeup, all of which remain as supporters (albeit for some under different names). These financial institutions, our shareholders, are pretty strong, which means that Origo has solid backing and that we work to institutional governance standards.
The fact that Origo is a not-for-profit organisation is incredibly important as it means that while ultimately owned by its supporting institutions, there is no employee ownership and all surplus is reinvested into its services for the benefit of the industry.
These companies also are incredibly supportive of our work because they have first-hand experience of the benefits we deliver. But they don’t have the only say in the service – it is the steering groups made up of Options users that work closely with Origo to determine development and priorities; this is fundamental to ensuring the service continues to be successful and attractive to the whole pensions industry.
Requests for new developments, dealing with changes in regulation and legislation and launching new services is both exciting and rewarding and after 7 years, taking a breather to take stock is reassuring. Here’s to another 7 years of excellence and innovation.
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