Options – the Open Market Pensions Transfer Service – went live on December 8, 2008 with the objective of significantly improving pension fund transfer times.
The service demonstrates providers’ commitment to improving customer service on pension transfers and the open market option – an area that has, for too long, been associated with delays and bureaucracy.
With the time taken to transfer funds and information between providers cut to just eight calendar days, from an average of 31 in 2007, Options has had a huge positive impact in its first full quarter of operation.
In quarter one this year, 6,981 transfers were processed via Options, with 58 per cent of these completed in fewer than seven days, 34 per cent in fewer than 14, and 8 per cent taking more than 14 days.
Performance is expected to improve further over time as refinements are made and more providers start to use the system, with the goal of ensuring all Omo and pension transfers are processed quickly and easily.
If the first-quarter results are impressive, the extensive rollcall of provider participants makes Options as comprehensive as it is quick. The recent addition of Pearl Group brings the total number of providers using the service to 14 and extends coverage to almost 90 per cent of the UK annuity market.
The range of participants involved is itself significant. Options is open to all pension and annuity providers and has the full range of pension and annuity providers represented – whether standard, enhanced and impaired-life annuity providers, closed or ceding-only companies.
Unsurprisingly, news of its success has attracted interest from other providers and further joiners will be announced shortly. Although new joiners may affect the overall transfer performance for a short period, the net effect will be a solid downward trend in transfer times and an end to tail-end delays.
The results reflect months of detailed development work by participating providers and Origo, the leading e-commerce standards and services body. Advisers will recognise the Origo brand from tried and trusted tools such as Unipass and its agency service but the Options service sits online between provider companies and requires no direct contact from advisers. Think of it as the invisible hand that sits behind the new process.
One area where advisers certainly will feel a direct difference is through changes to the annuity application process. Participating providers and Origo have listened to advisers and cut through the bureaucracy and form-chasing that has often characterised the Omo transfer process, with the resulting enhancements allowing a much faster transfer of information and funds based on a single signature in the provider’s application form.
Here is another reason to be cheerful – this means that advisers will no longer have to chase and submit separate contributions’ agency, lifetime allowance and provider discharge forms when transferring funds between Options’ participants.
All that time and ink can be saved for the new application forms developed by Options providers, which include all the necessary authorisations required to transfer and cut out the hassle and customer confusion. These new application forms will be rolled out over the next few months, and advisers can contact Options’ providers for details.
Participating providers, Origo and the ABI have engaged with advisers throughout the development of Options and this will continue. The Association of Independent Financial Advisers has supported Options from the outset and informed its members of updates to the service during rollout and all advisers can keep up to date with details of participating providers and product coverage at www.origoservices.com/ OptionsProviders.
Reduced paperwork and delays will benefit adviser and provider firms but the most important benefit arising from Options is the significantly improved customer experience. Options is about making sure customers receive their retirement income quickly and efficiently.
Consumer bodies have welcomed the service and the FSA has given its support for Options in a recent life insurance sector newsletter, alongside calls for non-participants to join the initiative.
The Options’ launch and quarter-one performance demonstrates what can be achieved when the industry comes together in a common cause for the benefit of customers. The initiative does not end here. Development work is under way to extend Options to non-Omo pension transfers, including some Sipp contracts by summer 2009, and to occupational scheme transfers in 2010.
Customers and advisers will have to be patient for a little while longer for these improvements but arranging Omo transfers via Options’ participants will no longer be a waiting game.
Full details of the Options initiative, products covered by the service and participating providers can be found at www.origoservices.com/OptionsProviders