When Marc Bolan wrote Solid Gold Easy Action in 1972, it was a smash hit , I was ten and I spent my savings to buy it
But I can’t get no satisfaction
All I want is easy action, baby
If the Treasury wanted a theme tune for Pension Freedoms they could do worse.
Sadly we are not singing about easy action , or easy access and what we are going to get in a couple of months is not going to be solid gold.
In a meeting with an (ahem) leading assurer yesterday, I asked what the service standard would be for a withdrawal from my personal pension bank account.
I could have the money, I was told, within three days.
Apparently this is in line with standard practice for the payment of trivial commutation.
The insurance industry just don’t get what the public want. Just like the banks that couldn’t get that people wanted to bank how they wanted when they wanted.
I got laughed at for suggesting that insurers should aspire to pay pension cash on demand
How much do I know
To talk out of turn
You might say that I’m young
You might say I’m unlearned
But there’s one thing I know
Though I’m younger than you
That even Jesus would never
Forgive what you do.
It took First Direct and now Metro Bank to disrupt decades of poor customer service and it will take an equally innovative and customer focussed pension provider to shake the insurers up!
In sub-saharan Africa, they’re doing away with banks. 90% of non cash payments in Kenya are paid from mobile to mobile. In a recent study by McKinsey, the rest of us were asked to wake up and smell the Kenyan coffee.
When you phone First Direct to make a payment or check at payment has been received , you are asked if that is what you wanted and if there’s anything else they can do.
That attitude inspires the next call, sometimes I phone First Direct to get a boost in the morning!
That’s easy action! And easy access is not three working days. It is quite possible for insurers to use liquidity in their pension process to advance payments against the sale of units and reconcile the payments the following day, meaning people have the money they want in their bank account when they want it.
It is absolutely not good enough for pension providers to point to ISAs and say that it’s just the same there, that’s not the point, the ISA is not a flow of payments, it’s something you build cash up in!
When I sold pensions in 1980s I sold the dream of solid gold easy action – of a vast reservoir of capital that my client could draw on when they wanted. I was a visionary (I didn’t understand you had to annuitise!)
Fortunately, the friends I sold pensions to in those days won’t have to annuities and while they may not have vast reservoirs, many have built up tidy sums in their pensions, which they are understandably keen to spend.
The psychological advantage of knowing that if all else fails, you can draw against your pension from a click of the keyboard or the touch of a phone will be a great comfort to many.
The pension provider who wakes up to the idea of a pension making people feel good (not bad) will be a winner!
What a downer!
Instead of all this positive stuff, we are all insistent on running down pension freedoms as if they weren’t gold but radioactive uranium
Take this story in the FT . If the link works, you can read yourself how a plethora of pension people are warning how some people will pay too much tax on lump sum withdrawals which are treated as regular payment by HMRC. The tax will get paid back when HMRC discover the big payment was a one off.
The recent meetings of the pension select committee have been dominated of late by demands for “second lines of defence” against pension same, reckless pension expenditure and ill or non advised tax-planning.
But there have been no stories from the insurers or mastertrusts of solid gold – easy action. Instead we have had consultations, conferences and a long line of reasons why it is not possible to pay people their money in the way people want.
Born to Boogie?
Forget Kenya, forget McKinsey, we are a first world country and we can’t do a same day transfer of people’s funds from the sale of units to someone’s bank account.
Frankly this is not good enough. I know of European administrators who can and will facilitate this. Today I am speaking with a well-funded start up keen to adopt the service standards pioneered in sub-Saharan Africa so that people can paid on demand in the UK.
I can’t get no satisfaction , all I want is easy access, baby..
TAKE THE POLL!