Pension freedom chaos: overwhelmed firms fail to answer calls
Savers trying to contact their pension company about new pension freedoms are waiting an average of 3.5 minutes for their calls to be answered. In 16% of cases, they are left hanging for so long that they give up before they get to speak to anyone. It means tens of thousands of people are not getting the help they need.
The figures have been released by the Financial Conduct Authority, which pointed out that pension companies are getting 200,000 calls a week, and spending an average of 8.5 minutes on the phone to each customer who gets through, As a result, some firms have been overwhelmed, and the service has not been up to scratch.
Tom McPhail, Head of Pensions Research at Hargreaves Lansdown said: "It is clear that some sections of the pensions industry are still struggling to meet customers' demands. Call wait times of 3.5 minutes and abandonment rates of 16% are quite shocking when you consider that investors have entrusted their life savings to these companies. Investors have a right to expect a decent level of service when dealing with their retirement savings. There is an urgent need for pension companies, the government and the regulators to work together to resolve these problems for the benefit of pension savers."
Customers may take a crumb of comfort from the fact that since the initial rush (when a million people called their provider in the first month) things have calmed down a bit. At the peak, people were waiting an average of 4.5 minutes and a fifth of all calls were abandoned. There's also the hope that the rate of calls will slow further in the next few months, and call times return to an acceptable level.
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Barriers
The findings are the first part of the FCA's investigations into how the new freedoms are working. It added that "While the evidence points to the overall majority of consumers having been able to take advantage of the new flexibilities, we are aware of some situations where this may not have been the case."
As a result it has also launched a fact-finding exercise, and over the next month providers will have to send information on any barriers faced by people who want access to their pension savings. This includes details of the options offered by pension providers, the advice requirements placed on consumers, the treatment of insistent clients, transfer procedures and exit charges.
This investigation is being welcomed by groups representing pensioners. Paul Green, director of communications at Saga, said: "It is good that the regulator is starting to act and ensure fairness for both individuals and pension providers. Exercising your rights should not be a source of profit for providers but an opportunity to help and just recover their costs."
Unfortunately, there is every chance it will unearth a range of problems. McPhail says: "There's a lot more work to be done, for example on pension transfer times which can still result in delays of several weeks before investors can get control of their money."
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