Pensions help for the elderly typically focus on the state top-up.

Hardly a matter for public discussion

One of the the most haunting aspects of living in the City of London is the number of people alone on the streets. Life expectancy for people who become homeless falls dramatically as they become vulnerable to both physical and mental illness that often lead to self-neglect and self-harm. As I found when I worked in a Crisis hostel over Christmas, many of the homeless have simply lost touch with support mechanisms that they are entitled to.These include rights to state and private benefits – including pensions.

Thinking about this over the past few days , I am also minded that the Government is helping build the technical architecture to help put people back in touch with their pension rights through the Pension Dashboard’s pension finding service. This much-delayed project may come too late  for some of the elderly homeless who’s days are numbered shorter than those to the dashboard’s release.

Indeed , we can be sure that a proportion of the “gone-aways” that amount to £20bn of legacy pension saving, have passed away. Since many people die without a next of kin, or with families so estranged as to have no interest in their passing, the benefits which they have built up – may never be claimed.

And among the gone-aways are many for whom mental capacity has so deteriorated that they have neither recollection or motivation to research their financial past. They may never benefit from the pension dashboard search facility for want of energy or technical capability.

For whatever reason, we must accept that many people will not claim pension benefits they are entitled to and these benefits may include pension credits, defined benefts from occupational schemes,  retirement savings in DC plans and even rights to the state pension. Indeed, I would be surprised if “non-claimants” are not factored into the funding arrangements of many schemes. It is hardly a matter for public discussion.

Age-friendly financial services

I would be interested to hear what facility can be built into the pension dashboard to further the interests of those lost to existing support mechanisms. Will it be possible for organisations such as Age Concern , Age UK, Crisis and Citizens Advice to act on behalf of the vulnerable.

I am aware , as I ask this question , that this poses questions of authenticity. How easy would it be to set up a claims organisation simply for the purpose of pocketing others money. The issues for many of the most vulnerable include the capacity of many to set up and maintain bank accounts. For the most vulnerable some help is at hand and Age UK have produced a booklet detailing a number of initiatives that are underway to ease this problem, you can read about them here.

Age-friendly pensions

Ironically, there is virtually nothing on the web about age friendly pensions so perhaps I can make a few proposals as part of my thinking about the AgeWage.

Another advert for pension credits

Help such as the advertisement above points to  Manchester’s Citizen’s Advice service. The same (digital) e-bulletin points out that nearly 2m people over 75 are still digitally excluded in a post Covid world.

Helping elderly to use online facilities is key to age-friendly pensions

We must do all we can to help older people use digital services while recognising that the pension dashboard may need to be accessed for them , by their various fiduciaries. In the rest of this blog I will look at ways to make pensions accessible by harnessing the power of digital technology in an age-friendly way

A pension backstop

The work we have been doing for occupational DC pension schemes, especially those that have been running for 20 years or more, suggests that a large number of those whose pension pots have been de-risked by lifestyling are allowing their pension rights to roll up either as cash or in bond funds that yield little more than cash. Many remain unclaimed at scheme retirement age and simply roll on seemingly to the ends of time.

These pots may belong to people who have no mental faculty being dead or little faculty being demented or they may just belong to those who have given up on pensions for whatever reason. I know that trustees are concerned about these pots and the people behind them. Can trustees access pension dashboards on behalf of these people to link them to other databases? I am thinking in particular of the state pension system which must be the most financially inclusive in the land.

And where people are found who have no access to a pension but through the state system, can we find a way for the bank to which their payments are made, to be made aware of rights elsewhere?

And in the event of people being reunited with their pension rights, can we find a default mechanism to pay people their pension rights, if only a cash pathway? I mention the payout of cash as a last resort though I see the Pension Pathway as preferable, here the money in a pension pot would buy pension pounds in a collective DC plan that would pay additional income to the person found, as the backstop. I appreciate that a pension cannot be paid to those who have died and may be inappropriate for those in the final stages of mental or physical decay.

For the large DB plans ,there is a capacity to make back-payments as a cash sum to those who have unclaimed rights , but this capacity is unused where the beneficiary cannot be found. Large occupational pension schemes and the PPF should also be able to find pensioners through the dashboard and have the capacity to liaise with those operating databases where goneaways can be found.

A pension backstop for commercial pension providers too.

While the interest of a trustee of a scheme set up by an employer to pay pensions has little in the way of conflicts in finding pension claimants, the same isn’t the case for commercial providers, especially where the scheme is funded by management charges on deferred benefits.

While trustees, IGCs and GAAs can be clear about their fiduciary duty, the executive of the pension funders may be conflicted between the interests of shareholders and management on one side, and the beneficiaries of the scheme or policy on the other.

Here the case for intervention from Government is stronger. I feel that the pension dashboard should not just be reactive resource for pension providers but a proactive  service which providers can and should use to match member records of potentially vulnerable customers to their owners.

I would define those customers as any who have unclaimed benefits and are identified as being beyond state pension age. I would go further than insisting on proactive steps to find the pensioner, I hope that in time we can move to creating for them a backstop pension that would be paid as a Pension Pathway unless there was a clear argument for it to be paid as cash (death or impending death).

Footnote

Listen on BBC Radio 4 – 1215 https://t.co/DL84MhkU2e

— Shari Vahl (@sharivahl) December 1, 2021

Shari Vahl’s investigation into the ease with which people can be cheated out of their property, follow the link from Shari’s tweet. Thanks to Alan Chaplin for reminding us that trust can easily be abused. As Alan says, the ease with which power of attorney can be granted to a fraudster (Julie), is frightening.

In this case, as in the case of a vicar in Luton, the fraud was discovered. But the people involved were not elderly and of sound mind. The Land Registry claims that only £3.5m was paid in compensation for fraud against the register.

But the Office of the Public Guardian  (OPG)  is a different agency, right now it looks to be a weak link which puts the elderly at particular risk.