Ground ’em! The freedom fiasco
WE arE now 12 days away from the pensions revolution, and already the letters and emails of complaint are pouring into Money Mail.
Savers are finding that the freedoms promised are being barred by what often look like unnecessary barriers and terrible communication from the insurers.
It really comes as no surprise that some firms are failing miserably to explain the options to retirees. They’ve always been absolutely terrible at this — you might even think it was a deliberate attempt to get us to unwittingly hand over more money than we need to.
Many pension contracts were set up decades ago in a different age, when the f reedoms now being handed to savers were never dreamed of.
Unravelling these complicated deals was always going to prove problematic.
Some insurers have also always been awful at administration. They spout meaningless figures about how long it takes to transfer your pot from one provider to another, which have absolutely no correlation to your experiences in the real world.
For example, they have a computer programme called Origo, which is an electronic pension transfer system.
Using this, once you ask for a transfer, your pot should move from one provider to another in nine days. But frequently we hear from readers whose transfers take a month or more.
Many are also distressed about the outlandish transfer quotations they are given.
When you want to move your money from one company to another, y ou need to request a valuation of your pot f r om your current provider. This won’t be the same as the actual value you were last quoted, but a reduced amount.
Notionally, the reduction is to protect the assets of others savers in the pension scheme. But some of these quotes seem simply to have been plucked from thin air and are such an enormous reduction that the saver is left with no option but to stick with the rotten deal they’ve already got.
regulators need to act now before this fiasco becomes a scandal.
They must ensure that transfer quotations being doled out are consistent, realistic and not being applied to schemes where a reduced valuation is not justified.
Where necessary, savers need to be given a suitable explanation as to how the valuation was calculated — otherwise fears of a rip- off will only grow.
The greatest struggle the insurers are going to have in this pensions revolution is being transparent and clear with their customers.
When the Chancellor unveiled his reforms, the immediate criticism of them was that savers would go out and bl o w their cash on a Lamborghini, leaving them nothing for their final years.
It turns out these fears may have been misplaced — not because of anything pensioners have done, but rather because insurers simply won’t give them their cash.
Pensions perk
I CaN’T help thinking the pensions industry could take a leaf out of the marketing of the new Help To Buy Isa. ‘There’s a £50 bonus for every £200 you save,’ the Treasury’s leaflet on the new savings pl a n says. ‘ The government wil l boost your savings by 25 pc.’
What an amazing perk for first- time buyers — if only we could all get a benefit like this. Only we can. It’s called tax relief, and you get it every time you pay money into a pension. and guess what? Pay in £200 and you get a £50 bonus from the Government.
and the bonus is not limited to £3,000, as with the Help To Buy I sa — but £ 8,000 i f you’re a basic-rate taxpayer.
We’d have much more engagement in pensions if more people were made to realise and understand the incredible perks already available to them.
In fact, the pensions bonus is so generous that politicians want to reform it, so that more of it is paid to basic-rate taxpayers.
It seems increasingly likely that, after the election, we could be heading to a system where everyone gets 33 pc relief — so a £66 bonus for every £200 anyone saves into a pension.
Should this flat- rate system happen, i t would also be the perfect time to reform the way we talk about pensions. I WaNT to thank aer Lingus, Jet2 and Wizz air. These three airlines have had a falling-out with their regulator, the Civil aviation authority (Caa), over flight delay compensation.
Despite numerous defeats in the courts, they refuse to pay what the regulator thinks are perfectly legitimate claims to customers.
These airlines are actually doing us a favour, because their two fingers to the regulator is making the case even stronger for an independent statutory body and ombudsman for the travel industry.
The watchdog has great responsibility for the safety and smooth running of the skies over Britain; it shouldn’t have to waste its time and resources sorting out airlines that can’t treat their customers fairly. This should be the job of a regulator funded by a levy from the airlines. and complaints should be handled by an ombudsman, where airlines have to pay for every case that is investigated.
This is precisely what happens in financial services, and travel firms should be no different.
These airlines have displayed utter disdain for the current regulator. The watchdog should offer one more chance to abide by the rules and then ground them.
Stopping them from flying for a few days would soon make them realise how frustrating and expensive it was for their customers to want to fly somewhere, but suddenly find they can’t.