Since the rollout of pension freedoms in April, there has been a watching brief on whether the reforms have been a success or not. There has been anecdotal evidence of the types of queries providers and advisers are seeing, and how consumers are reacting to this new found access to their pension pots.
What has been harder to come by is robust statistics on whether pension freedoms are working for consumers. Indeed, Money Marketing revealed only this week that our attempts to find out more about consumers’ experience of Pension Wise were blocked by the Treasury because publishing does not suit its timetable.
What we have been able to ascertain, however, is the extent to which the public are struggling with the reforms. Through a Freedom of Information request to the Financial Ombudsman Service, Money Marketing deputy head of news Tessa Norman has comprehensively pieced together what is happening on the ground – and it does not paint a pretty picture.
The data reveals that of the 232 enquiries received by the FOS related to pension freedoms, half concern delays and poor service.
Wading through the data, there are two emerging themes: firstly, consumers are frustrated that what they thought would be an easy process to access their money is proving to be anything but. The second, and more worrying trend, is that the level of discontent is unsurprising, and worse, almost to be expected.
The tight timescale the industry had to work to deliver the reforms is well documented. But over three months later, that excuse is now beginning to wear thin. Providers need to grasp the nettle here and at the very least ensure that any and all customer communications on pension access are clear and accurate, to avoid a deluge of complaints later on.
The insistent clients issue also rears its ugly head. Advisers are well versed in the nuances of this controversial topic, but all consumers see is an obstruction to getting their cash; through the advice requirement itself, and then their inability to find someone who is prepared to help them.
Unfortunately, this snapshot is a stark revelation of the extent to which pension freedoms are failing consumers. The individual who wanted to cash in their pension and was told they had an annuity, only to respond they did not know what an annuity was, is a case in point about the need to improve a system where people are grappling with retirement income for the first time.
Natalie Holt is editor of Money Marketing