When a member of a defined-contribution scheme requests a transfer, it is difficult to see why this should take a long time to carry out. In these days of unit-linked investments, it will normally only take a day or two to turn the member’s entitlement into cash and to transfer it to an appropriate receiving scheme. It is something of a surprise to find that the legal time-limit is, in fact, six months.
Mr Philippe Pollet was seeking to transfer his benefits from an occupational defined-contribution scheme to a self-invested personal pension. Optimum Capital Ltd (OCL), the principal employer and trustee of the scheme used third party administrators who were removed following an investigation by HMRC into their involvement with other pensions schemes. However, two sets of replacement administrators turned out to be little better and OCL claimed the right to use the full six-month period to carry out Mr Pollet’s transfer.
OCL also asked Mr Pollet to sign a disclaimer form agreeing that he would take no action against OCL and its directors relating to the delay. Mr Pollet, understandably, refused to sign and took the matter to the Pensions Ombudsman.
The Ombudsman ruled that OCL was not being reasonable in delaying the transfer and the problems with the administrators was not sufficient excuse. Mr Pollet was awarded the not inconsiderable difference between the unit prices of the scheme investments for the four-month period between the transfer request and the actual transfer. The Ombudsman also awarded Mr Pollet £500 for “distress and inconvenience” and commented that one month seemed a reasonable period to carry out a simple transfer request.
So be warned – a simple transfer request should not, without a very good excuse, take longer than a month despite the statutory provisions!