On a day when I learned that 6 out of 10 savers failed to “consolidate workplace pension pots”, I’d like to stand up for these hopeless failures. Firstly, most of them will not use the word “consolidate” and some have no idea what it means. Pension Bee use the word “combine” – let’s not raise the bar on literacy till we price our customers out of the conversation.
So let’s look at that word “fail”. Savers are failures because they do not jump the hoops we put in their way. Apart from grisly jargon like “consolidation”, they have to contend with
- A system in which £20bn of saver’s money has gone missing because savers “failed” to inform the people that looked after their money , they’d moved house.
- A system that fails to report to people how their pensions have fared, hiding behind the convenient get out clause “past performance is no guide to the future”. It is however the past that most people are concerned with.
- A system where most administrators do not acknowledge e-signatures and require paper chains which can include the exchange of birth certificates as ID cheques.
- Where the simplest request is met with a requirement that the saver seeks financial advice,
- Where, once the paper has been exchanged, the hapless failure has to wait up to 46 working days for his transaction to be processed and his or her pots combined. Here are some results of a survey by Pension Bee in 2018
Here are Origo’s latest times
It’s great to see firms like Aegon, cleaning up their act and – along with Standard Life, Aviva and other workplace pension providers – helping savers out. But where are NOW Pensions and Smart and why are People’s (B&CE) and Nest still lagging?
At a Pension PlayPen coffee morning I asked Andy Cheseldine, who leads the small pot consolidation program why so few of the master trusts are showing up on Origo’s leaderboard. I was told that many considered the cost of using Origo (£8 per transfer) was too expensive. So members of workplace pensions who want to combine pension pots from the majority of master trusts face long waits because these trusts are too stingy to give them a proper service.
And we call these savers “failures”!
The failures are the providers who cannot let go of their small pots!
Andy explained that the short term accounting methods employed by these trusts meant they could not take a hit to the P/L for promptly activating a transfer. But it’s quite clear they’d earn back the £8 in a couple of years by not having to provide those with small pots with standard services or pay the general levy for having their pots.
This looks like a general fail on behalf of several providers. This is all the more odd as NOW pensions, Smart , People’s and Nest (as an observer) are due to enter into a member exchange pilot where they send off multiple pots to their rivals in return for a similar number back. The idea is members get bigger pots without “detriment” (another word that members never use – try “losing out”).
You may have noticed that Nest are an “observer”, apparently somebody wrote the Nest rulebook with the Hotel California clause “you can check out anytime you like, but you can never leave“. Nest allows bulk transfers in but not bulk transfers out. Sadly they will continue to sit on our small pots till they can work out how to rewrite their rules!
My mind goes back to the early days of customer supremo Mark Rowlands who told Romi Savova and I that Nest were happy using Origo to take money in, but not so happy using it to pay money out! It may have been the famous Romi stare or simply due to Mark’s influence and integrity, but Nest signed up to Origo shortly after for both services (as you can see from the Origo table above). Let’s hope that this is a precedent for member exchange!
But everyone gets value for money – don’t they!
While all this nonsense goes on, the master trustees continue to sign off statements confirming they are offering value for money, even as the hopeless failures they have as clients , trudge off disconsolately, to dream of digital dashboards and open pensions.
Everyone gets value for money because everyone benchmarks themselves against their own standard of service.
Meanwhile 6 out of 10 savers are failing to live up to the standards expected of them and are struggling to know what to do with the pots that they thought were pensions.
In practice, we are leaving people with a huge financial headache at retirement while we pootle about worrying about “detriment” and the need for advice and an hour with Pension Wise.
People have got lives to live, they do not want to be spending their leisure time filling in paper forms and tracing pensions and arguing over whether they have an adviser and they certainly won’t thank the pensions industry for not providing them with a pension at the end of it all.
National Tracing Day
My good friend Alan Morahan, supported by a bunch of insurers who are getting on with it, is helping people understand how to find their lost pensions and will be launching the first ever national pension tracing day on October 31st.
It’s not the most glamorous awareness day of the year but it is a start and – for want of anything better – I am giving him and the day, my total support!
Good for Aegon for flagging that most of us can’t do this “consolidation” thing. But let’s not brand our customers “failures” because they don’t dance to our pretty rickety tune.