The latest survey by My Pension Expert has revealed the true extent of pension transfer advice delays. This is a real problem for savers trying access their pension funds and financial advisors trying to help them.
The survey looked at almost 4,000 pension transfers that My Pension Expert processed over the last year. The results were criticised by some of the companies who claimed the numbers looked at were too small. But based on our own experience of pension transfer advice delays some of these figures seem to be a bit generous!
The My Pension Expert list was as follows:
- Prudential 18 days
- Clerical Medical 21 days
- Standard Life 23 days
- Scottish Widows 24 days
- Scottish Friendly 58 days
- The Peoples Pension 59 days
- Nest 60 days
- Wills Towers Watson 62 days
- DHL Pensions ` 65 days
- XPS Administration 120 days
The FCA itself may start publishing a similar list of performance for Banks and their savings rates. It has just set out a list of actions it’s going to take to put pressure on Banks to improve their rates in line with the Consumer Duty. This includes:
- Publishing league tables of savings rates offered by Banks to help customers make comparisons.
- Look at the rates offered online and through branches and question the differences.
- Focus on reviewing Banks performance on switching cash ISAs in terms of the time taken.
- Look at how Banks have changed their customer communications between now and the end of March 2024 to see what improvements have been made.
Let’s see if this makes an impact.
What hasn’t worked however, is the FCA’s attempt to introduce a new low cost streamlined advice process for consumers. The simplified advice proposal which was going to apply to investment ISAs has now need scrapped. Mainly because of a lack of interest from providers and advisers. The FCA reported that only 7% of advisers had showed any interest in the opportunity. The FCA says it will now roll this piece of work into its wider consultation on the advice and guidance boundary which it’s about to start.
This is another review into the thorny issue of how to reduce advice costs to customers and make them simpler whilst at the same time make them commercially viable. The barriers remain the same as simplified advice, however. As long as advice firms remain liable for claims on an open-ended timescale, they will simply not be interested in the project. Why expose yourself to huge potential costs for lower upfront fees?
But help and advice is badly needed. The latest research by the Institute of Fiscal Studies (IFS) shows just how little understanding there is around pensions and how much pessimism there is. The survey found that:
- Only 20% of people think that they will be better off than their parents when they retire
- 33% don’t think that the state pension will even exist in 30 years’ time
- Only 20% of people knew what the current pension was and
- Over 70% said that they didn’t think that it provided a reasonable standard of living.
A separate survey by Canada Life of younger people under 35 found that:
- Almost 40% said that they expected to retire at 60.
- But 75% had not worked out how much money they would need to retire early.
Meanwhile in the world of real money, annuity rates continue to increase at a rapid rate. According to Standard Life research rates have increased by 20% so far this year (for a 65-year-old man) and 44% since the start of 2022.
Average rates are now well over 6% for a 60-year-old man rising to almost 8% for a 70-year-old. Using data from the Standard Life tracker as an example, the lifetime income for a 65-year-old man has increased by over £25,000 on a £100,000 pot in the last 12 months. Understanding of the annuity market remains limited however, with 70% of people not monitoring rates and almost 50% knowing what a good or bad rate was.
Now may be a good time to talk to your financial advisor for pension transfer advice about annuity options.