Transfer delays are costing pensioners

Published on Monday 20 July 2009 21:33

INVESTORS are losing out on hundreds of pounds in retirement income as insurers drag their feet on pension transfers, according to new figures.

Research by Virgin Money found that retirees are missing out because annuity rates continue to fall while they wait for their pension firm to transfer their funds to their chosen annuity provider.

For each week's delay, a 65-year-old man buying the best annuity rate available effectively loses income of 138 a week in retirement, with a ten-week delay costing almost 1,400, claimed Virgin Money.

Scott Mowbray, a spokesman for the company, said: "With a fixed annuity, the income you receive is fixed for life so the losses from delays are also fixed for life."

Recent research by Hargreaves Lansdown found that insurers take an average of 30 working days to transfer pension funds to other annuity providers. The Association of British Insurers has claimed that its electronic transfer system, launched late last year and covering almost 90 per cent of the annuities market, had succeeded in reducing transfer times to an average of eight days in the first three months of this year.

Virgin's Mowbray agreed that the programme had helped improve transfer times. "However, not all companies are backing its scheme and there are plenty of poor performers," he added.