Denmark’s financial watchdog has criticised pension providers in the Nordic country for making it tough or impossible for people to transfer dormant pensions to their current employer’s scheme.
Ulla Brøns Petersen, head of section at the Danish FSA (Finanstilsynet), said: “Our investigation, and the complaints we regularly receive, show that the pension companies are still throwing nails on the road in front of customers who want to take their mandatory pension schemes with them.”
Conditions that limited pension customers’ options had to be factually justified with regard to an individual’s needs, she said.
“But we don’t see consideration for the individual customer in the terms the companies use to justify the lock-ins,” Brøns Petersen said, adding: “And therefore our message to the companies is that they must focus more on the customer’s needs.”
The authority said a job change could force an individual to withdraw from their compulsory labour-market or company pension, adding that it then often made the most financial sense to add that scheme to the new one.
“But pension companies’ conditions can make moving difficult or, in some cases, impossible,” the FSA said, adding that it had not been possible to solve this problem through negotiated guidelines with the industry.
The FSA said it had established best practice last year for cases where pension customers wanted to transfer their scheme, with those guidelines having been determined through two supervisory decisions made on situations where customers had been prevented from transferring away from a provider by unreasonable terms and generic advice.
Those decisions related to PensionDanmark and Danica Pension, according to the FSA, with the two firms having been handed out official orders in 2021 regarding impediments to customers’ moving their pension to another company.
The Copenhagen-based authority said its subsequent investigation into whether the best practice was being followed showed pension providers were still putting hurdles in the way of transfers.
“The FSA’s investigation shows it is mainly the self-employed who cannot take their employer’s schemes with them,” the agency said.
For example, it said, people who worked for themselves were met with demands that a new scheme also be mandatory or contain equivalent benefits, such as a children’s pension – even if the customer had no children.
The FSA said it hoped firms would now note the report’s conclusions along with previous decisions and reassess the terms together with their contracting parties, adding that it would carry out a follow-up investigation at a later date.
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