This morning’s Pension PlayPen coffee morning was devoted to the noble profession of pensions administration and featured Lesley Carline of KGC and Maurice Titley of ITM. Maurice talked of the challenges of GMP equalization and Mcleod and Lesley of the consolidation of TPAs and reductions in skilled administrators. Both talked of the Pension Dashboard but not with enthusiasm or any sense that pension administrators were looking forward to sharing data.
Indeed for a time, the questions focusing on dashboards were about identifying people by means of their home address. I know of many ways to identify someone , but by their home address is not high on my list – that we continue to hanker after the means of sending our customers pieces of paper, shows how far we are from the digital economy.
There are two speeds at which pensions are working, the speed the customer expects and the speed the customer gets. If you are a customer of Pension Bee you get a digital service in line with what you expect, if you go outside of the beekeeper’s purlieu, your service delivery expectations need to be adjusted.
Take Sally Lloyd, a Pension Bee customer who wanted to transfer money from a scheme administrated by Willis Towers Watson. Sally’s pension transfer took more than seven months to complete.
“I am a project director in construction. I’ve worked at several companies and wanted to combine my pensions. PensionBee seemed to be the best option.
I like being able to see the performance of my plans, and it gives me peace of mind knowing that all my plans are in one place. Most of my transfers were easy, but some were difficult.
It seems that some providers, like Towers Watson, were reluctant to transfer my money to PensionBee, they kept sending emails and paperwork through the post, which was a delaying tactic.
They asked me to prove my identity with copies of my passport, utility bills and checked that my address was correct. It was odd that they had to check my address because they were posting letters to my house.
They declined my passport three times, it was ridiculous. The information was clearly displayed there, so I don’t know why they did that. They also took a long time replying to my emails. I had to chase them many times.
PensionBee found that 42% of savers who have previously tried to change pension providers feel that the process was so difficult that they would not attempt another transfer.
Many savers also reported issues accessing support from their providers during the transfer process, with more than half (51%) citing some kind of difficulty, from long waiting times (22%) to giving up after multiple failed attempts (9%).
In addition, 50% of savers who attempted to transfer a defined contribution pension were still required to complete paperwork, with more than a quarter (27%) having to complete multiple sets of forms. This is despite electronic transfers being widely recognised as much faster, more efficient and secure for consumers than traditional paper-based methods.
Slow, difficult transfers have been an issue for many years. In 2016 the Financial Conduct Authority (FCA) asked the pensions industry to speed up transfers for the benefit of savers and a number of working groups, like TRIG and STAR, were formed. However, recent data published by Origo Options, the pension transfer service, showed that five years after this process began transfer times are in fact slowing down.
PensionBee’s own data reveals a series of slow transfer offenders, with Mercer at an average of 46 days to transfer and Now Pensions (44 days) and Capita (40 days) not far behind. This was what Pension Bee’s Romi Savova had to say
“Long and complex processes deter people from engaging with their pensions and switching when it may be in their best interests to do so. Low levels of digitisation exacerbate chronic under-saving because people don’t have the right tools and information to understand the importance of planning ahead for their financial future. Technology provides an opportunity for the industry to better engage savers, and it’s time for pensions to make their way into the 21st century with a simple, modern pension switch guarantee.”
Who could disagree?
While the pension industry has congratulated itself on staying up and running during the pandemic, the rest of the world has been switching to a digital way of doing things. Look at your phone and ask how far you’ve come since 2020.
Then ask how different your pension experience is to pre-pandemic days. We are still arguing over whether we have the right address for customers used to minimum fuss financial transactions on banking apps that send data and money effortlessly. While pension experts agonize over pension scams, the delays chronicled by Sally Lloyd and many others open the door to online hustlers who can deliver a decent user experience, albeit at a high cost to our savings.
The way to stop the scammers is not to make our administrative processes harder and slower, but to adopt modern techniques of data and money transfer , embrace less manually intensive processes using Smart Contracts and the distributive ledger and focus human intervention on guiding customers through the hazards of our insanely complex tax regulations.
Pension Administration is largely a shit-show
We are seeing pension administration standards stagnate and even go backwards and we blame scammers and the pandemic.
Rather than accelerate towards data sharing and the dashboard, we hide data away and make processes for accessing information and transferring funds a frustration. The 40 day transfer is still acceptable to an industry that has not adjusted service standards since the early years of the century.
Defined Benefit administration may be irredeemably lost to the lawyers , but DC plans – especially post 2011 workplace plans – should be dashboard ready and proud of it. But right now service levels harp back to a bygone age. Pension administration is not moving on , it is a disgrace and well done Pension Bee for calling it.
Transfers aren’t the only problem with pension providers. I got an email from my pension provider (a large Mastertrust) saying that my annual statement was available for viewing. It wasn’t.
They also encouraged me to use their calculator to plan for retirement. The calculator’s first question was about my age. When I input that, it said “age must be between 18 – 64”. I am in my early 70s. When I questioned this restriction with the pension provider, they said “Our calculator is designed to help people calculate how much they will save by the government retirement age, which is 64.” It looks as if the end to compulsory retirement ages and the changes to the state pension have passed them by.
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