Not before time, the spotlight is starting to be shone on the shocking pension help service being provided by Pension companies.
We have been raising the issue for a number of years now, but consumer organisation Which has now got involved. In a survey of Pension company customers, they have found high levels of dissatisfaction. Over a fifth of savers said the process was very slow and a similar number complained that they had to transfer their pensions in order to access them in the way they wanted to. Some of this is being blamed on technology. Over 50% of pension records are still estimated to be paper based rather than digital.
The Financial Ombudsman Service has seen increases in pension help service complaints since freedoms were introduced back in 2015. Last year they received over 7,500 complaints.
The planned digital pension Dashboard may provide the solution. But progress on completing the technology is very slow. Delivery is not expected for at least three years.
Pension providers really do need to get their act together.
Perhaps they don’t realise that pension advisers like us make recommendations which take into consideration service levels, not just financial fund performance. It’s no good being in the best performing fund if your provider never answers the phone and it takes months to access your funds when you need them. We keep a track of pension help service performance internally. Currently the worst offenders in our opinion, based on our experiences include Mercers, Scottish Friendly, Rail Pen, Prudential and sadly most local government schemes are on our list as well.
Pensions are a huge market. Almost 600,000 savers accessed their pensions for the first-time last year. For most people this will be an opportunity to access the biggest pot of money they have ever had. It is important that the pension help service being provided does not cause problems.
Hopefully the new Consumer duty requirements will focus the minds of Pension providers.
The FCA are also concerned. But from a scam perspective. The more people accessing their pensions for the first time, the more vulnerable customers might be targeted. That is why they recommend that customers check their Scam Smart website, to make sure that they are dealing with a genuine company.