Since we published our Robin Hood index last year, PensionBee has been gathering even more evidence from the frontline. The bad news is it’s still all paper pensions and pigeon post!
We often end up becoming the pensions ‘Samaritans’, the only place that customers can turn to to vent their anger, frustration and feelings of hopelessness in trying to get old providers to give them back their OWN money. We are sympathetic listeners, we also have to navigate these archaic systems on a daily basis.
Stop holding our money hostage!
Over the course of helping thousands of people wrestle back control of their money from their old providers, some really clear themes begun to emerge about what makes our customers most cross about the transfer process. Here’s the top three:
1 No agreed transfer completion date - and you cannot even track progress. Things can trundle along for months with no end in sight! Many throw the towel in; some ask us if it’s even legal.
2 Sending original birth and marriage certificates in the post. Because, who cares if they go missing?!?
3 No online access - old school providers still only communicate by phone or post. We all just love to spend our days listening to hold music and leaving work early to get to the post office before it shuts. Again.
We have developed a few workarounds over the last year, like our own database of average transfer times, so at least we can give the customer an idea of how long things are going to take with each provider. Customers have to sit in a ‘transfer blackhole’ otherwise, and the old school providers seem to think that is called treating customers fairly.
We battled with providers to let customers send photos of their driving licences (rather than send original birth certificates) and we have begged, pleaded and cajoled providers into sending transfers electronically because it’s faster and much safer for customers. Sadly they just won’t listen. They all like to do things in their own different and special ways, regardless of whether that works for their customers. There are just no proper rules, and it’s frustrating for everyone - apart from them.
Necessity + frustration = solutions
So this is when the idea for the 10-day pension switch guarantee campaign appeared. Born out of a desire to fix all of these issues, and channel our shared frustrations into something positive.
Just three steps can improve the pensions transfer experience and start to rebuild trust, and the 10-day pension switch guarantee is how we do it:
1 All providers have to use electronic transfers consistently - no more paper forms!
2 There’s a maximum time limit of 10 days on end-to-end transfers
3 A safelist of Financial Conduct Authority (FCA) regulated personal pensions to help raise awareness of and prevent scams
None of these solutions are new; each one has already has been proposed in various government papers from at least 2012 onwards. But, more importantly, all are possible because they are already happening, we are just yet to see any formal push to implement them as a set of proper rules.
The 10-day pension switch guarantee means that all providers will have to use electronic transfers for our defined contribution pensions. Not only is this quicker, but it’s much safer for customers as payments are tagged and traced, so no money goes missing. Everything is transparent and we all know where the money is at every step of the process. This is entirely possible - it’s already happening in Australia in 3 days or less.
Let’s talk about scams
The switch guarantee also helps simplify the messaging on pension scams. Not all schemes are a scam, so let’s differentiate between what could be a scam, and what is definitely not - by using clear, objective criteria:
Transfers to schemes operated by an FCA authorised firm or entity are on a safelist - these transfers should be conducted electronically and in 10 days or less
Transfers to non-FCA regulated schemes are not on a safelist, so require extensive manual due diligence and take six months or less
This approach means that the transfers to legitimate schemes can occur easily and quickly, freeing up providers to look more closely at questionable non-regulated schemes. It also maintains an end-to-end time limit for both types of transfer, essential for accountability in the industry.
We have all become accustomed to universal switching principles, such as the ones we see across energy, telecoms and banking. It’s high time we simplify this complicated transfer mess and introduce some proper switching rules in pensions. If only to bring this industry kicking and screaming into the 21st century!
And now over to you
We launched the campaign to raise awareness of these issues more widely, and that’s already begun to happen:
Everyone we speak to is very interested in our case studies and evidence ‘from the frontline’. We also have the support of a fantastic coalition of other Fintech companies - Scalable Capital, Moneyfarm and Nutmeg - all of whom offer or are set to offer FCA-regulated pension products.
We should all be able to switch provider easily and quickly, without jumping through hoop after hoop to earn the providers more money in fees. No more excuses and paper pensions - just safe, quick electronic transfers and transparency on what is happening when.
If we want to see any real change on this issue, we need to take action and call on our local MPs for help. You can also sign our petition to get the issue raised in parliament and ask your friends, work colleagues and family to do the same!
We’ve already heard back from some MPs on this, and they are all very supportive of more transparency in pensions, we just need to keep up the pressure. You can also sign our petition to get the issue raised in parliament and ask your friends, work colleagues and family to do the same!
Pensions are our money - we should be in control.