One in 10 people attempting to move their pension savings ultimately abandon the process due to excessive waiting times, with delays stretching as long as 15 months in some cases.
Unreasonable waiting times can be grounds for a compensation claim, the Financial Ombudsman Service (FOS) has said.
Under current rules, pension providers are permitted to take up to half a year to process transfer requests.
Consumer group Which? expressed concern the existing system is "not fit for purpose" as pensions dashboards are being developed to help savers view all their retirement pots in one place.
It anticipates this will lead to greater numbers of people actively managing their pension arrangements.
John Wilson, aged 61, experienced the full extent of these delays when transferring the last of his three pension pots.
The process took 15 months to complete, with Mr Wilson initially being informed the hold-up stemmed from the need to disinvest funds from his main account – a routine procedure for defined contribution pension transfers.
After waiting six months, Mr Wilson grew anxious and began questioning whether he had fallen victim to fraud.
Pension transfer delays see one in ten savers abandon process
|GETTY
When the money finally arrived, he described feeling "huge relief".
Mr Wilson lodged a complaint and subsequently received compensation for the prolonged wait, though he felt there was "no acknowledgement" of the "discontent and distress" the situation had caused him.
Another case saw a nine-month delay prompt family members to contact police over scam concerns.
The Financial Conduct Authority (FCA) is putting forward reforms to address these problems, including a requirement for data to be shared within 10 days, acceptance of digital signatures across the industry, and clear comparisons between existing and new pension schemes.
LATEST DEVELOPMENTS
Skyrocketing state pension age - will you be affected? | GB NewsAn FCA review discovered that over three-quarters of sampled providers completed transfers within 10 days, with the regulator stating its proposals would give consumers "clearer, more timely and more meaningful information when considering a transfer".
Jenny Ross, Which? Money editor, said: "It's essential the industry urgently gets to grips with the issues facing pension savers and ensures a consistent service for those moving their retirement pots."
Lisa Picardo, chief business officer UK at PensionBee, added: "The UK's statutory deadline for pension transfers hasn't changed since the nineties and is grossly outdated."
Those experiencing unreasonable delays with their pension transfer have options for seeking redress.
The first step is to lodge a formal complaint directly with the pension provider or financial adviser, providing evidence such as the date of the original request and subsequent correspondence.
If the response proves unsatisfactory, consumers can escalate the matter to the FOS, which handles disputes between customers and financial firms.
The FOS considers unnecessarily prolonged delays that result in financial loss to be valid grounds for a complaint.
Should the ombudsman rule in the consumer's favour, it will instruct the firm to pay compensation.
However, there is a time limit – complaints must be submitted within six months of receiving a final response from the provider.