The government-backed Star Initiative has reached 50 signatories, surpassing its initial target of 30. Holly Roach looks at the project’s progress.
Capita has signed up to the government-backed Star Initiative, taking its total number of participants to 50.
The not-for-profit initiative, which launched in November 2018, aims to improve industry standards while reducing pension transfer times for defined contribution schemes to less than 21 days.
It also measures and accredits performance excellence across the industry, as well as specifying good practice targets for completing a transfer.
Capita joins 49 other members including Mercer, XPS Pensions and Smart Pension, and will be involved in a number of meetings to share ideas on developing and defining industry standards and good practice.
The first meeting with members of the initiative - which was created as a collaboration between Criterion and TeX - took place in the summer and they continue to be held as more members join to input suggestions and guidance on how to best improve good practice when conducting transfers in shorter timeframes.
Galvanising the industry
Star steering group founding chairman Tom McPhail said: "The more organisations that become involved, the firmer our foundations are and the more momentum we have.
"We are pleased with the wide-ranging and extensive industry support we have received and continue to receive."
Smart Pension director of policy and communications Darren Philp revealed: "We have a number of initiatives in flight to work towards the goal of quicker transfers and the Star Initiative brings a significant number of players together to improve the system for all, and it certainly focuses the mind."
The steering group is in the process of developing ISA and General Investment Account (GIA) working groups along with two pension working groups. McPhail said these groups are "galvanising the industry to forge ahead with change and to improve things for consumers".
The working groups were all established as part of the Star Initiative and the ISA and GIA groups are now in the final stages of development.
Capita pensions and benefits managing director Nigel Purveur said the initiative is "critical" for driving best practice. "As part of Capita's transformation, we want to demonstrate how we are changing to benefit our clients and customers."
The Financial Conduct Authority (FCA) highlighted Star's remit in its Investment Platforms Market Study in March and revealed it expects the industry to resolve the transfer issue or face "further regulatory action".
The watchdog is encouraging firms to consider becoming a member of Star "as a way of improving the switching process and achieving better outcomes for consumers".
It told PP it "welcomes and supports the progress the industry is making through Star to improve the switching process in the platforms, investments and pension sectors. The framework that Star is implementing is aligned with our desired outcomes to improve the customer experience and reduce how long it takes to complete transfers."
The FCA is due to review the industry's progress this winter, and again in 2020 if required.
Purveur said: "Through Star, the industry has the opportunity to demonstrate its commitment to improving consumer outcomes, in advance of the regulator's review."
Philp noted: "It is still early days and the group has now started working through processes and reporting. This is not always as easy as it seems, as well as speeding up transfer times, we also need to be mindful of scams and ensure people are appropriately protected."
Philp argued joining the initiative is a "no brainer", adding: "Either the industry works together to raise standards or the government and regulators will be forced to act."
Currently, transfer processes are not consistent in the industry and timeframes for making the transfers vary between providers. This inconsistency is time-consuming for providers and boosts administrative costs.
While there is a one-off cost of £3,000 for each firm and an annual charge of £1,700, participating schemes will benefit from greater certainty and lower administrative queries and costs in the long term.
Pensions and financial inclusion minister Guy Opperman said he welcomes the "progress made so far in speeding up transfers", but has previously suggested schemes will face being "named and shamed" if they do not sign up to the initiative.
A recent PP survey however revealed the industry does not agree schemes should be named and shamed should they choose not to sign up. Several argued it was a "political gimmick", and one said the initiative had "dubious value and could lead to misrepresentation".
A small proportion of industry members (13%) agreed with Opperman that schemes should be called out if they choose not to participate, with one suggesting not signing up is "essentially avoiding good practice".
The FCA said while "it is not a regulatory requirement to sign up to Star", it will review industry progress and "will consider taking further regulatory action if needed".
Reaching 50 signatories is a milestone for the initiative, surpassing the original target of 30 sign-ups.
Government-backed auto-enrolment provider NEST signed up in August, along with master trusts Smart Pension and Now Pensions which both signed up in the same month.
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