Article by Christina
Research from My Pension Expert found that nearly one third of people in the UK had taken pension transfer advice in the last five years.
That is a significant number.
Two thirds of those took pension transfer advice before they made their transfer, which is good news. But of course, that leaves two thirds of people who haven’t transferred their pensions leaving them with the same provider. This is part of the problem with the small pension pots issue we’ve highlighted previously.
More people said that they might transfer if the pension transfer advice process was easier. To be fair without an advisor it isn’t an easy process. Even with an adviser it takes time. As we’ve complained in the past pension providers are by and large terrible at providing the information needed to transfer in a timely manner. Then even worse at processing the actual pension transfer itself. According to the figures the average transfer time is 30 days but that is certainly rising in our experience. With almost 4 million Letters of Authority (requesting information on existing pension schemes) issued every year, the process needs revising and bringing into the digital age.
Cynics argue that it is in the interests of pension schemes to take their time over the transfer process, so that they can continue to retain the funds. In many cases delays leads to clients giving up and settling for the status quo. There are also road blocks built into the system like the flag system. This was designed to prevent pension transfer scams, but increasingly pension providers are applying the controls to every transfer, adopting a risk adverse approach. Even for small pots. This needs to be looked at.
There is other help available from the Money and Pensions Service (MAPS). They don’t offer pension transfer advice, but instead offer a pension guidance service. 71% of users said that the service had made them more confident. 87% of users said they were thinking about moving their pensions and nearly 70% said they had made changes to their pension after the guidance. That’s a positive step.
The MAPS service also helped people become more aware of how to avoid scams. With over 800 people reporting being the victims of pension scams last year, help is needed.
Not everyone wants help with their pensions, however. Research from Canada Life showed that 80% of over 55’s retired without any help or guidance from anyone. Instead, they opted to do it themselves. They also found that:
- 40% of people questioned were happy with their retirement.
- But 30% weren’t happy.
- 10% said that they hadn’t realised how much money they would need when they retired.
- Only one third of women questioned said that they would stay with their current financial adviser if their partner died.
- Only 20% of women said that they had been involved in the pension transfer advice by their advisor, which we find shocking as we only provide advice when both parties are there.
But not everybody might be benefit from pension transfer advice or pension consolidation. Some people don’t have a pension. Research found that 40% of self-employed workers did not pay into a pension. This will create huge problems for millions of people in retirement. The very least that the self employed should do is to ensure that their National Insurance contributions are up to date. So that they can take advantage of the maximum State Pension available.
HMRC has just launched a new online system to enable people to check their state pension forecast online.
The service tells people whether they could pay extra voluntary National Insurance contributions in order to increase their State Pension. Previously people had to use a helpline to find out, but the new online system is expected to save everyone time and make the process more efficient.
