UK pension providers appear to be grinding slowly to a halt on all pension transfers as walls go up and a seige mentality grips them. Emboldened by UK regulators effectively stating “that money in UK pensions should stay in UK pensions”, UK providers are throwing up as many roadblocks as they can for people wanting to legitimately move their pensions.
Strong messages from the Regulators are being misinterpreted
Recently, the UK regulator has come down hard on people transferring out of defined benefit schemes, and have confirmed that their starting point is “people are worse off if they transfer out of a defined benefit scheme”. So much for regulatory impartiality, and never mind if your UK scheme is in a financial hole, or you no longer live in the UK and so have different tax consequences than someone in the UK. The protectionist walls are going up, maybe as a result of Brexit and the Government not wanting the UK financial services economy crippled any further.
UK pension providers have latched onto this regulatory sentiment have baked it into their processes already, making it more and more difficult for people to transfer their funds out. It has become a war of attrition for those tryng to wrestle their funds out of the UK pension system.
Little road-blocks equal big delays
Our recent dealings with UK pension providers have become more and more protracted as they continuously fail to meet even their own lax service standards, or worse simply do not respond to member enquiry.
Picking on some recent examples, a longstanding request for bank details and fees for a client to pay for a new pension transfer value from their UK scheme (a simple request). We have been chasing this information now for two and half months, their latest update was:
“Due to bad weather conditions and staff on sick leave we are now working through a back log and no timescale can be given for us to provide you with the recalculation details”
Really! This is simply not good enough and this is by no means an isolated incident. In the last month alone, another scheme has blamed weather conditions, one has stated that despite having all the information necessary for a transfer, it will up to eight weeks to make the payment, the list of excuses goes on and on.
Big business dehumanises UK pensions
Much of this is brought about by pension schemes that have outsourced the management of their company pensions to large ‘professional’ pension administration providers. These companies, like Capita, sweep in, implement new systems and try to reduce costs. In their constant pursuit of cost savings service levels diminish. We are now seeing more evidence of service detoriation as most companies have guaranteed response times of eight weeks (with some even blowing out to six months). So that means that they can take up to eight weeks to answer the most simple question.
What gives these people the right to take 8 weeks to answer a basic question. Imagine requesting some information from your bank and being told to wait 8 weeks…you’d be marching in the streets demanding a better deal!
What’s more, a number of these companies, like Capita have been in the firing line themselves recently with the Government worried about their financial health.
The joy of getting out
Ironically the lasaffaire attitude of UK pension providers has created a rod for their own backs. Recently, clients of ours that have transferred their pensions had decided enough was enough and they simply did not want to have to deal with UK pension providers anymore. The fact that the economics of a transfer made sense was simply an added bonus.
To quote one “I am happy that after the transfer I will never have to deal with our UK pension provider again. Imagine if this is how hard it was to facilitate a simple transaction, how difficult they would have made it for me to actually receive my pension from them.”