Jeff and Romi
Jeff Prestridge, one of our most senior and consumer friendly journalists has been through a hard time bringing his pension pots together as he goes through a divorce.
There has been a lot of talk in the past few weeks from executives of insurance companies and representatives of those losing out, who are wary of “malpractice” and want to delay the pension dashboard and strengthen their portfolios against transfers by customers wishing to get out. Here is Jeff’s introduction in the Sunday Mail
Transferring a pension to another provider should be easy-peasy, but it isn’t. Far too many companies drag their feet for all kinds of reasons – incompetence foremost among them – and it isn’t good enough. At the end of the day, it’s our money, not theirs.
I speak from personal experience. Currently going through a protracted divorce, this painful process has been exacerbated by the unacceptable time it has taken one pension provider (a well-known investing platform) to return forms paving the way for my pension to be transferred to my wife. Only my personal intervention, at the request of my solicitor, got the ball rolling.
In a world where most financial transactions are conducted online, there is no excuse for companies to dilly-dally when it comes to pension switching.
Jeff is not an insider, he comes at the problem from the point of view of a customer
Of course, ceding firms (those losing our custom) need to ensure we’re not being scammed by a new pension manager promising the earth and then disappearing with our money in a swag bag. And consumers must be made aware of any benefits they may lose by transferring elsewhere (for example, the right to a favourable guaranteed annuity rate).
But transfers should only take days, not weeks or months. As one pension insider told me last week: ‘Switching pensions should be straightforward in this connected world, but it’s a complete mess.
‘Some transfers go through relatively quickly while others take months and turn into an administrative nightmare for the poor souls involved. Errors, delays, poor processes, inadequate technology and too many participants passing the buck and blaming others for their own tardiness is something that demands attention and maybe even a change in primary legislation to force improvement.’
You cannot watch TV for long without seeing an inducement from one pension company or other to manage your money and more particularly , to bring your pots together so that you know what you’ve got.
It’s a problem that City regulator, the Financial Conduct Authority (FCA), is aware of. It has been seeking opinion from the great and good on how retirement outcomes for consumers can be improved in a changing pensions landscape – against the backdrop of an employment market where job mobility has come to the fore, resulting in people accumulating a potpourri of pensions.
By ‘consumers’, the FCA means those who work in the private sector and primarily depend upon a big dose of stellar stock-market performance to see their pension funds (defined contribution) deliver an adequate income in retirement.
The reality is that most FCA regulation is around wealth management, it is not about retirement income but the issues people have with their complicated affairs with legacy pots,
The callout from the FCA also covers the regulation of self-invested personal pensions (not fit for purpose) and whether rules should be tweaked to help consumers engage more with their pensions (yes, please). But a big chunk, quite rightly, is dedicated to improving pension transfers.
Online pension provider PensionBee, headed by Romi Savova, is one of the first companies to confirm it has responded to the FCA’s ‘discussion paper’. It wants the Government to legislate for a ten-day pension switch guarantee.
It would be a clone of the (successful) current account switch guarantee which the coalition government introduced 12 years ago – resulting in a bank account switch taking only seven working days.
This is key to Pension Bee’s argument and it should be key to consumer champions’ demands.
PensionBee’s proposal is not without a dose of self-interest, but it’s an idea the Government should embrace. However, given the sluggish pace at which plans to launch online pension dashboards are progressing (enabling us to see all our pensions and state pension on one page), it might not get the swift attention it deserves.
As has been reported last week, there is a mounting lobby against the launch of the dashboard , 7 years after being initially promised.
In the meantime, the pensions industry would do itself a great service by agreeing to publish half-yearly statistics on the average time it takes ceding companies to meet requests from customers wishing to transfer their plans.
If Value for Money is to include service, then this is a key metric.
Many years ago, numerous consumer champions called for insurance firms to publish regular statistics on the percentage of claims they paid on protection policies (permanent health insurance and critical illness).
The industry balked at the idea but was eventually persuaded to provide the stats. This resulted in all providers pulling up their socks and playing fair when it came to meeting claims.
This is why Jeff Prestridge and his 40 years of experience is important. Because many of his readers (here in the Daily Mail) will remember past campaigns by champions such as him, Paul Lewis and Ros Altmann.
The ABI met last week and jolly satisfied they were with their performance. But on transfers they should not be. Jeff concludes
Greater transparency on pension switching times would have a similar revolutionary impact
Here’s Pension Bee calling out bad practice 7 years ago.
CLICK THROUGH!
