The good, the bad and the ugly of the 2018 Robin Hood Index

Rachael Oku

by , Writer

31 July 2018 /  

31
July 2018

The good, the bad and the ugly of the 2018 Robin Hood Index

It’s that time of the year again, where we unveil the good, the bad and the ugly of the pensions industry. All in the hopes of bringing about positive change and getting customers across the land a fairer deal on their pension. We’d also like to see an improvement on a few of the basics that we take for granted in other industries like decent customer service, transparency and efficiency.

For our third annual Robin Hood Index we analysed the transfer times, average annual charges, and exit fees imposed by 35 of the UK’s biggest pension providers. In the three years that we’ve been doing this you’d think we’d have seen it all, but this dusty old industry of ours still has some skeletons in its closet. Here’s what we uncovered…

The ugly

Instead of rising from the ashes of previous appearances in our Robin Hood Index, Phoenix Life is back on the list and more emphatically than ever. When we looked at exit fees across 5,431 pensions we were gobsmacked to find that Phoenix Life is responsible for each of the top five exit fees. Somewhat unbelievably Phoenix Life’s biggest exit fee charge was a staggering £12,245.

via GIPHY

5 biggest exit fees

Position Provider Exit fee (£)
1 Phoenix Life 12,245
2 Phoenix Life 10,543
3 Phoenix Life 9,413
4 Phoenix Life 9,206
5 Phoenix Life 7,239

Source: PensionBee. 5,431 from June 2017 to April 2018, of which 305 had exit fees.

Sadly, our findings about Phoenix Life don’t end there. One incidence that we examined closely showed a Phoenix Life exit fee would reduce one unlucky saver’s pension by 96%. We also discovered that Phoenix Life’s highest exit fees are on ‘with-profits’ pensions (termed ‘market value reductions’), which means they escape the Financial Conduct Authority’s focus and rules for now.

via GIPHY

5 biggest exit fees as a proportion of a pension

Position Provider Exit fee as a percentage
1 Phoenix Life 96%
2 Abbey Life 69%
3 ReAssure 56%
4 Abbey Life 47%
5 Phoenix Life 45%

Source: PensionBee. 5,431 from June 2017 to April 2018, of which 305 had exit fees.

The other poor performers on exit fees as a proportion of a pension deserve a dishonourable mention. Together with Phoenix Life, Abbey Life and ReAssure are imposing similarly excessive charges.

via GIPHY

The bad

When it comes to pension providers, not all are created equal and this year Now: Pensions takes the biscuit as the most expensive annually (again). Their average annual charge of a whopping 62.1% is permitted by the Department of Work and Pension’s charge cap legislation, but it tops our list for all of the wrong reasons - partly in thanks to an annual £18 “subscription fee” on top of their average annual charge.

Unless you plan to keep topping up your Now: Pensions pot or it starts generating sizable returns, small pension balances can cost a pretty penny and are at risk of vanishing into thin air after a few years of fees.

via GIPHY

5 worst providers by average annual charge

Position Provider Average annual charge
1 Now: Pensions 62.1%
2 Zurich* 5.9%
3 Aegon 1.1%
4 Phoenix 1.0%
5 Nest 1.0%

*predominantly personal pensions

Source: PensionBee. Based on a total 1,056 annual charges found between June 2017 and March 2018. Each individual provider has a sample of at least 20 observations. PensionBee calculated the charge by adding up all fees, including fund fees, fixed £-based fees and any other policy fees that may apply. In the case of Now: Pensions, a £-based fee of £18 (in addition to a %-based fee of 0.3%) is applied to fairly small pension values (approximately 40% of the pensions in the sample of 91 were below £100).

The good

Now for the part where we can shine a spotlight on the great things that are happening in our industry and the huge strides some providers are making to force positive change.

When it comes to average annual charges several providers are operating fairer fee structures with Legal & General coming in lowest at 0.3%. Fidelity and B&CE (The People’s Pension) follow closely with fees of 0.4% and 0.5% respectively.

5 best providers by average annual charge

Position Provider Average annual charge
1 Legal & General 0.3%
2 Fidelity 0.4%
3 B&CE 0.5%
4 Standard Life 0.8%
5 Aviva 0.8%

Source: PensionBee. Based on a total 1,056 annual charges found between June 2017 and March 2018. Each individual provider has a sample of at least 20 observations.

Also, Aviva, Scottish Widows, B&CE, Canada Life and, ahem, Phoenix Life, are now taking an average of less than two weeks to transfer a pension.

via GIPHY

If you’d like to find out more about this year’s winners and losers, grab some popcorn and watch the Robin Hood Index Awards 2018, presented by our glamorous Emily…

What do you make of the findings? Tell us in the comments section below.

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Capital at risk

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Did your provider do badly?

Sign up to PensionBee and we’ll combine your old pensions into a new plan that you can manage online.

Sign up now

Capital at risk

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Have a question?

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