Providers drag their feet as the charges mount

THE TIME before retirement should be full of optimism. It should prompt a check on pension performance to see it is on target and to consider if a switch to a lower cost provider makes sense.

Imagine therefore if the pension provider drags its heels, taking weeks and weeks to respond, whilst continuing to have high charging rates. PensionBee, an adviser which helps find old pensions and place them into an easy to use online plan, has analysed some of the naughty providers involved.

Aegon and Old Mutual Wealth take 20 days to reply, Phoenix Life 22, Fidelity 23, Mercer and Virgin 24 but two are horrifically slow: Legal & General and St James’s Place 34 and 40 days respectively.

St James’s Place already has history. It was fined £250,000 by the regulator, the FSA, for inadequate monitoring and record keeping. In 2014 one of its senior partners was banned and fined £300,000 after clients lost £2.2m. One provider, Nutmeg, even charges £20 to respond to a request for information.

Annual management fees between providers vary enormously and can seriously erode retirement funds. In the survey conducted between September last year and May 2016, Fidelity charged just 0.4 but Phoenix Life – no stranger to this column – and Virgin raised a full one per cent fee. In the greedy chairs are Old Mutual Life with 1.6 per cent and St James’s Place on 1.4 per cent.

To delay further, some providers demand a marriage certificate (Aegon, Old Mutual Wealth), rather than use a standard ID or national insurance documentation.

All such actions are designed to deter those approaching retirement from investigating the performance of their pension with the risk that the funds may be taken away. If only the recalcitrant providers put as much time and skill into investing the money as they do into thwarting genuine enquiries, many such problems would disappear.