Rightly so – that is your cash. If the bank said they were unable to give you instant access to your cash account when that is why you chose to bank there, you should pull all your money out.
So, why does the pensions industry think it is OK that some people are currently waiting months to get their hands on their pension pots?
The most common argument is that the regulator expects providers and advisers to act as a line of defence between scammers and savers hard earned cash.
This is a massive problem and I certainly think providers and advisers do have a role in making sure people aren’t conned – pension freedoms mean dodgy dealers are targeting savers in a bid to pinch their pots.
But the soaring numbers of pension scams can’t be used as an excuse for why pension transfers can take many months rather than a matter of days for some people desperate for what is their own cash.
This week research from Origo revealed the real reason why the transfer process is dragging for some is a disconnect between what data pension administrators consider is needed for a transfer value analysis system (TVAS) report and the information IFA firms are requesting in order to advise clients.
The soaring numbers of pension scams can’t be used as an excuse for why pension transfers can take many months rather than a matter of days for some people desperate for what is their own cash.The research was carried out among 16 of the industry’s third-party administrators (TPAs) and Employee Benefit Consultants (EBCs) and identified companies had seen increases in requests for cash equivalent transfer values (CETVs) of up to 135 per cent and in actual pension transfers of up to 100 per cent.
This trend was expected to continue or increase once pensions dashboards are introduced in 2019.
Research participants were unable/unwilling to provide end-to-end transfer times, but the regulatory timeframe, as mapped by The Pensions Regulator, for a DB transfer is nine months – basically you could have a baby in the time it takes to get your pension pot (scientific advances permitting).
Included in the transfer assessment requirements is the need for ceding schemes to carry out a number of mandatory checks, including member ID, due diligence on the receiving scheme and advice checks.
These checks inevitably further slow down a process which members expect to be as simple as “transferring money between bank accounts”.
However, one of the most commonly reported barriers to smoother, faster transfers, as cited by TPAs and EBCs, was just inconsistent data requests from IFAs.
This was attributed to the fact that many IFAs were new to dealing with DB transfers and the data that is required for TVAS, and so were applying defined contribution processes and, in consequence, making requests for “irrelevant” information.
This has resulted in some administrators providing the absolute minimum data they believe is required for TVAS, in order to deal with the volumes of requests.
On the other side of the coin, it was recognised that IFAs consider the information supplied by pension scheme administrators as not fully encompassing their needs in order to provide full advice to the client.
Action needs to be taken to address this. Ten years since the credit crunch – when trust in this industry was shattered – we cannot have people who believe this is their cash waiting ages to get their hands on it, and being told they must pay spiralling administration costs in order to do so.
People moaning about how long it takes them to find out how much is in their pension pots and how many hurdles they had to leap over to get their hands on their cash makes pension providers and advisers look bad.
There needs to be a standard form that advisers/savers fill in for all pension transfers.
ONLY if the destination the pension cash is heading towards sends red warning lights flashing – overseas property investment, taking it all as cash when you have no other source of income, etc – should there be any more questions asked.
When I was in my 20s, before I had children so my account was less used to straining at constant demands for money for school shoes, etc, I went into a travel agents (yes, it was that long ago) to book a once-in-a-lifetime holiday driving across Australia.
As my bank was used to me saving cash, only taking out a certain amount of cash per week for living expenses and promptly paying my mortgage, they called me up while I was still in the travel agent to check it was in fact me who was blowing all this cash on a holiday.
I had no problem with that. It was a quick check. I answered a security question to prove it was me. It didn’t wipe out my account. I appreciated the call was for security purposes (to protect MY money) and make sure somebody hadn’t stolen my card.
I found the call reassuring and it took seconds out of my life.
That is what is needed – a quick call with a few security questions rather than endless months of going back and forth in the form of letters and feeling like your pension cash is still out of reach.
If the answer to a pension provider or advisers question of how do you intend to spend this cash is “I intend to blow it all on a round the world trip” then a few warnings should be given.
These warnings – so long as clearly shouted at the saver - should mean when that person is sat shivering in retirement with the dim and distant memory of that holiday failing to keep them warm, they can’t go moaning to the ombudsman.
As with anything in life, yes people need help to spot scams but there also needs to be an element of “buyer beware.”
If I had later been unable to buy a house because I went on that holiday – which I really enjoyed - would it be right that I could later claim compensation from my bank for failing to flag that fact with me when they called me?
emma.hughes@ft.com
