𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The pension transfer system is “not fit for purpose” and is hitting economic growth, warn some of the leading lights in the industry.

A report from nine of the biggest digital pension platforms including AJ Bell, PensionBee and Moneybox, warns that old “legacy” pension firms delay pension transfer requests by mis-using anti-scam legislation.

They are demanding the transfer deadline be cut from six months to 30 working days. They claim digital pension benefits will be worth billions more to the economy, if the government acts.

At present, the “plumbing” of the old pension sector is out of date and working against the interests of both investors and the economy, since money is held up for so long, say the firms.

Brian Byrnes, Director of Personal Finance at Moneybox. said: “The overall customer experience is only as good as the slowest innovators, and savers should not still be relying on paper processes in 2026. For too long, legacy providers have lagged in adopting innovations that improve saver engagement and outcomes. The FCA must look beyond headline statistics and examine why pension transfers so often stall. There are cases where providers flag ‘overseas investments’ while offering the same global tracker funds themselves, raising questions about whether these flags are being used to frustrate legitimate transfers and retain customer funds.”

Lisa Picardo, Chief Business Officer UK at PensionBee, said: “Pensions belong to savers, not the Government or providers. Individuals carry the risk if their retirement savings fall short, so they should have real choice over how and where their money is invested. They must also be free to move providers easily, yet the transfer process still isn’t fit for purpose. As workplace schemes consolidate, and investment strategies converge and move towards private markets, it’s vital that savers can still vote with their feet when it comes to what may be the biggest and most consequential pot of money they’ll ever own.”

The analysis claims that the direct-to-consumer digital pension sector has already become a pillar of the UK economy, with £139bn in assets under management—equivalent to 5 per cent of UK GDP.

By 2055, this sector alone is projected to contribute £9.1bn to the economy through higher productivity and £9bn through increased pensioner incomes.

The authors note that while savers are confined by a 180-day statutory limit on transfers, a bank account can be switched in seven days and a Cash ISA transferred in fifteen.

Digital personal pensions providers say they offer the flexibility and transparency workers need to manage irregular incomes and consolidate multiple “fragmented pots” to provide a better retirement.

The report comes just after chancellor Rachel Reeves cut the amount of money people can sacrifice from their pay cheques to put in their pension pots without paying national insurance (NI).

She introduced a cap of £2,000 per year on NI-free salary sacrifice, after which national insurance would be applicable. Officials believe the change could raise between £3bn and £4bn annually in tax, but it will also shrink savers’ long-term pension pots.

The House of Lords has tabled an amendment that would see the cap rise to £5,000.

The report was sponsored by AJ Bell, Freetrade, Hargreaves Lansdown, Interactive Investor, J.P. Morgan Personal Investing, Moneybox, Monzo, PensionBee and Vanguard.