A couple in their forties are sitting next to each other in a waiting room. They have fallen asleep from having to wait so long.

GBPensions director Tony Chamberlain reflects on 2023, and the most-asked question about UK to NZ pension transfers.

As the year draws to a close, I’ve had a sobering thought: 2024 will be my 37th year working in the financial services industry and my 17th specialising in cross-border pension transfers. In many ways, the time has passed in the blink of an eye – which is ironic really, given that pension transfers themselves are taking an infuriating length of time to complete.

Indeed, the question we hear most often from members of the public is: “How long will my pension transfer take?” From clients, it’s: “How much longer will my pension transfer take?”

Believe me; we share your frustrations! Just a few years ago, on average, a pension transfer took about six months. (Potentially a bit longer if there were multiple schemes to deal with.) Nowadays, we’re regularly seeing nine to 12 months or more.

How did we get to this point? It’s probably a combination of factors.

The impact of Covid-19

Remember that, despite the potential advantages of digitally-encrypted signatures, the scheme administrators still require hard copies of paperwork with “wet signatures”. When the pandemic lockdowns kicked in, the world’s postal services slowed almost to a stop. Like other organisations, the administrators cut back both the number of customer service representatives and the service centre hours. Many of these measures remain in place today and, as an adviser, I can no longer speak directly to several of the administrators. Instead, I have to send our query or issue via an adviser-dedicated portal, which, with its limited number of characters per enquiry, can itself lead to further misunderstandings and delays.

Pension transfer regulations

For years, we’ve spoken about UK and NZ legislation being like “moving goalposts”, but the bureaucracy has now increased to an extraordinary scale.

We are regularly informed of bank scams and financial fraud being on the rise, but pension scams have also been prevalent in recent years. It is understandable, therefore, why some of the new requirements have been put in place. Arguably, the motivation does come from a good place: wanting to protect people and their hard-earned savings. However, as reported by the likes of FT Adviser, between December 2021 and September 2023, 21, 250 “amber flags” were raised against pension transfers. But more than 80 per cent of these were for reasons “unknown” or related to overseas investments.

Wealth manager Quilter requested this data under the Freedom of Information Act. “Quilter says the intention of the overseas category was to flag unregulated and potentially fraudulent investments, but instead, it has caught many legitimate investments and halted potentially low-risk pension transfers,” writes Tara O’Connor.

Money Helper

Some of our clients must now have a phone call with a representative from Money Helper, part of the UK Government’s Money & Pensions Service, before the administrators of their UK pension will agree to transfer their funds. The department has not been without its controversy, but again, it’s possible to argue that this extra step in the transfer process is focused on safeguarding clients’ monies and ensuring they are making informed decisions of their own free will. That said, when clients tell us that their phone calls lasted three hours, dragging on past midnight, it’s hard not to feel exasperated on their behalf.

Unfortunately, for some, the process is too onerous. Even tasks that should be relatively straightforward, like trying to update a name or address registered with the UK pension scheme, have proved excruciating. In the end, we know that some people have simply given up, taking the view that it’s not worth the effort.

What makes this all the more annoying is that the UK pension providers and administrators are, therefore, retaining pots of money that their investors would have otherwise withdrawn.

Could things improve in 2024?

Possibly. For the reasons cited above, the UK government is reviewing the guidelines it introduced in 2021 to tackle pension transfer scams. It has committed to working with The Pensions Regulator (TPR) and the wider pensions industry to determine if changes to pension transfer rules are warranted.

Personally, I could answer that question right now – as, I suspect, could many of our clients! Hopefully, common sense will prevail sooner rather than later, and the rules can be adapted to strike a better balance between protection and practicality.