The UK’s largest master trusts have formed a working group to reduce the time required to transfer defined contribution pension pots between providers. The goal is to modernize a process still reliant on paper and manual steps.
Four major providers lead the effort
Nest, the People’s Pension, Smart Pension, and Now Pension launched Pathfinder, a collaboration aimed at improving pension transfers for savers. The group will examine automation, common data standards, and other technologies to simplify the process.
Pathfinder is inviting other master trusts and industry stakeholders to join. The initiative comes as new regulations under the Pension Schemes Act prepare to allow automatic consolidation of dormant small pots, which should increase transfer activity.
The MoneyHelper Pensions Dashboard, scheduled for release in the 2027-28 financial year, will likely drive more transfers by giving savers easier access to their pension details.
Small pots and slow transfers
A study published last year revealed that about 40% of master trust memberships may eventually consolidate. The research, conducted by the Pensions Policy Institute with Nest, Smart Pension, the People’s Pension, Now Pension, and Legal & General, analyzed over 76 million records from those providers.
The results indicate that without action, the number of small, dormant pension pots will keep rising. This creates administrative challenges for providers and confusion for savers. Faster transfers could help by making it easier for individuals to combine their retirement savings.
The current process is often slow. A recent report by technology firm Origo found that while simple transfers now average 10 days, many still depend on paper forms and manual processing. More complex cases can take months.
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Testing new standards
In April, two UK master trusts completed a transfer using ISO 20022 messaging over the SWIFT network. The system is already used for cash and asset transfers globally, including ISA transfers. The test demonstrated the potential for fully automated transfers to be processed at lower costs while maintaining security and auditability.
The Pathfinder members aim to modernise transfer infrastructure by reviewing current practices, exploring alternative options, and sharing ideas. The group wants to ensure improvements focus not only on efficiency but also on helping members make the right choices.
Angela Staral, chief operating officer at the People’s Pension, described the project as “a promising first step.” She explained that while pension transfers differ from switching bank accounts—given their long-term impact on retirement—the process should still be straightforward once savers decide.
Gavin Perera-Betts, chief customer officer at Nest, stressed the importance of balancing speed with security. “Our members’ pension savings represent one of their most significant financial assets,” he stated. “Improvements must focus on efficiency while helping members make informed choices and protecting them from fraud.”
Sue Whittington, chief operating officer at Smart Pension, said: “Master trusts need transfer processes that match the scale.”
The group is now taking practical steps, including expanding participation and testing new technologies. If successful, these changes could make pension transfers faster, cheaper, and more reliable while preserving necessary safeguards.
PensionBee, a DC consolidator, has previously urged legal limits on transfer times to prevent delays. While Pathfinder hasn’t proposed specific deadlines, its efforts may support future regulatory changes.
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