Yahoo Finance Savers losing thousands because of ‘archaic’ pension firms
Savers have lost thousands of pounds after being blocked from accessing their cash because of delays and outdated systems at pensions firms, a new report has found.
Providers have been criticised for poor customer service and “inflexible” products, according to the report from consumer campaign group Which?. It said the 2015 pension freedoms reforms had not worked – as 17pc of those accessing their savings had to transfer their pot to another company to spend it how they wanted.
One in four had issues with customer service and Which? also found huge differences in the fees charged for drawdown among providers, ranging from 0.06pc to 0.52pc, resulting in additional costs of more than £10,000.
Which? said the industry was stuck in the last century. Sam Richardson of Which? said “archaic” providers were “rooted firmly in the last century and seemingly unwilling to modernise.”
He added: “The introduction of pensions dashboards, which would allow a saver’s to see all their pension pots on one website, could solve a lot of these problems. The pensions industry must stop dragging their feet and let the Government launch dashboards without delay.”
Following the launch of pension freedoms in 2015, savers can choose to spend their pots how they wish. Prior to this the majority of savers with personal pensions or “money purchase” workplace pots had to buy an annuity.
Millions have taken advantage of the reforms, with savers having withdrawn £59bn from their pensions since they were introduced. But the consumer group’s research showed accessing one’s pension pot was still far from straightforward.
The differences in the fees charged ranged from 0.06pc for Interactive Investor’s Pension Builder to 0.52pc for Aegon’s ARC product. For a saver with a pot worth £261,000 – the average – this would cost them £10,139 after 10 years and £17,845 after 20, Which? calculated.
Consumer rights expert Martyn James said: “Of all of the financial services the pensions industry is by far the most complex and unnecessarily complicated, with some processes that were hopelessly out of date decades ago.”
In June, The Pension Regulator, which regulates workplace pension schemes, found that more than half (51pc) of schemes continue to hold at least some member records non-electronically.
Reader Service: Keep your pension costs to a minimum. Learn if you can transfer your pension yourself and the benefits of consolidating your savings.
