Pension providers causing difficulties for savers

Pension providers causing difficulties for savers

Savers are struggling to access their pensions because of providers’ poor service and systems, according to research from Which. 

A survey of 2,153 Which members who accessed one or more of their pension pots in the past 24 months found that inflexible pension providers are creating difficulties for savers.

The research explored the impact pension freedoms has had on the market seven years after its arrival. 

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Designed to allow greater flexibility for those with defined contribution pensions, pension freedoms aimed to give savers more choice with what they can do with their retirement savings, but Which said providers are inhibiting its effectiveness.

Almost a fifth of respondents (17 per cent) had to transfer their pot to another company to access their pension in their preferred way, while a quarter described the process as slower than expected. 

Long delays were a common theme in the responses, Which found.

In one case, a woman was left almost £3,000 out of pocket after waiting months to access pension funds she was owed from National Grid and Aviva, following a pension sharing order as part of a divorce settlement. 

Delays by National Grid meant she was unable to access her money for seven months and she was also asked to cover her ex-husband’s share of ‘admin fees’. 

According to Which, some providers are simply ‘not ready for the digital age’.

By way of example, it pointed to figures from the Pensions Regulator in June that found 51 per cent of DC schemes continue to hold at least some member records non-electronically

One respondent attempted to withdraw money from her voluntary contribution pension held with Prudential but was stalled because she holds a building society current account which required her to complete a paper form and further identification checks.

The woman, Linda Hobbs, from North Yorkshire, described her experience as being one of “a shambolic organisation with extremely poor customer service”.

The findings align with Financial Ombudsman Service figures that showed complaints about pensions have almost doubled since 2014-15.

Of the 7,608 complaints received by the FOS in 2021-22, many involve administration issues, poor customer service, or people being given wrong or incomplete information about a pension.

Pensions dashboard

Which has called on the government to ensure the pensions dashboard is launched without “any necessary delay” to help pension holders navigate the complex market. 

“Our pensions survey paints a picture of archaic providers that are rooted firmly in the last century and seemingly unwilling to modernise,” Which Money deputy editor, Sam Richardson said.

“The introduction of pensions dashboards could solve a lot of these problems for savers, so sections of the pensions industry must stop dragging their feet and let the government launch dashboards without delay.

“The regulator should also keep a close eye on pension providers to make sure their customer service is meeting improved standards.”  

Introduced in 2015, pension freedoms allow DC pension holders to buy an annuity (previously the default), keep their money invested and take an income (drawdown), or take the whole pot as a lump sum.