Named and shamed: Local Governments, the Civil Service and Royal Mail are making savers wait months to access pension cash
By Katie Morley
Britain’s biggest work pension schemes are accused of deliberately preventing savers from accessing the new pension freedoms, after it emerged that a number are delaying cash transfers by more than three months.
Major analysis of around 13,000 pension requests found Local Governments, the Civil Service and Royal Mail are taking the longest to provide basic information over 55s need to move their money.
The research found that these employers, which between them have millions of staff, are routinely making them wait more than 12 weeks for information savers need to transfer their final salary pensions into cash or new, flexible pensions with bank account style access.
This is despite some pension schemes, such as Clerical Medical and the Railways Pension, being able to provide the same information in just two weeks.
Britain’s slowest pension schemes (final salary)
Pension scheme
Average time before basic information provided (weeks)
Greater Manchester Pension
9.7
West Midlands Pension
10.6
Royal Mail Pension
11.2
Civil Service Pension
11.6
First UK Bus Pension
12.4
Some savers facing delays are also being told they must pay up to £400 to access pension cash because their fund calculations have expired and need redoing.
Funds then have to be transferred to another provider or cashed in, which can take as little as six days or as long as a year.
The revelation is just the latest in a string of blights to the Government’s flagship pension reforms, which were introduced in April to give over 55s unfettered access to their retirement funds.
But as this newspaper has repeatedly highlighted through our Make Pension Freedoms Work campaign, millions of savers are facing costly and inconvenient barriers to spending their money as they like.
The research, by Portal Financial, a financial adviser firm, found the slowest final salary pension pension schemes are the First UK Bus Pension Scheme and the Civil Service Pension Scheme, where savers face average waits of 12.4 weeks and 11.6 weeks for key information.
Britain’s slowest pension schemes (defined contribution)
Pension scheme
Average time before basic information provided (weeks)
St James’ Place
4.2
ReAssure (HSBC)
4.3
Capita
4.5
Mercer
4.9
NEST
5.0
Savers with defined contribution pensions, where annual income is not guaranteed, are generally able to obtain pension information more quickly. The slowest defined contribution scheme, Nest, the National Employment Savings Trust, takes an average of five weeks.
Jamie Smith-Thompson, managing director of Portal Financial, said, “Currently, many pension schemes are unable, or unwilling, to support the new pension flexibilities.
“The delays can be very stressful and many scheme providers urgently need to improve their response times. We believe that action is necessary and pension transfers should be as simple as changing bank accounts with clear service levels and timings that need to be adhered to.”
Nick Sex, director of service management at Nest, said: “Because Nest is a young scheme, we’ve had very few requests to transfer money out into other schemes for the purpose of consolidation. Where these occur we respond as quickly as we can, but this depends on the complexity of the case and the information provided to us by members. For transfer requests, we aim to reply in 10 days based on all of the information being provided to us.”
A spokesman from the Royal Mail Pension said: “We strongly dispute this claim. We already go a long way above and beyond what many other UK schemes do for members. We offer flexible retirement so that people can take benefits payable at 60 (from age 55) and continue to accrue benefits payable at 65 and still be covered for death in service, redundancy and ill health benefits if required. Members are also allowed to use their additional voluntary contributions to fund their tax free lump sum.
First UK Bus Pension and the Civil Service Pension have been contacted for comment.
The Telegraph
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