Pension freedoms were designed to give the over 55s control over how and when they spend their retirement savings – but financial firms seem to be trying to call the tune.
Complaints against pension providers have shot up by 20% as disgruntled customers turn to industry regulators with gripes after they failed to get their hands on their money or faced high charges to do so.
The Financial Conduct Authority (FCA), the organisation responsible for policing the financial services industry to ensure fair play for consumers, picked up 73,055 complaints about pension providers in the first six months of 2015.
The rise is 12,000 complaints up on those received in the second half of 2014.
The problem for retirement savers seems to be pension firms are making withdrawing money too difficult, even though pension reforms were aimed at making this easier.
Flexible access problems
Many providers have not yet introduced flexible access drawdown, leaving transferring their pensions to another provider the only option for many retirement savers.
Other firms offering flexible access insist savers pay for expensive financial advice before handing over any money or charge exit fees of up to 5% on the value of the draw down or fund transfer.
The FCA explained 60% of consumer gripes were complaints about poor customer service. The rest were about advice offered by providers and how the firm calculated pension values or charges.
The three firms attracting the most complaints from consumers were:
- The Prudential (6,209 complaints)
- Friends Life (5,188)
- Aviva (4,153)
The Pension Ombudsman has also seen pension complaints increase this year.
In the latest annual report published in July saw a 21% rise in consumer complaints, with 1,280 new investigations.
Surge in inquiries
The complaints covered disputes over benefit payments, disagreements over quotes and other financial information, transferring funds and ill-health retirement.
In an interim report issued this week, the Financial Ombudsman revealed complaints against pension providers were up 12% in the first six months of 2015 – with the majority relating to managing pensions, although 700 complaints were about flexible access.
Trade body The Association of British Insurers blamed an 80% surge in inquiries about flexible access for the problems faced by many pension firms.
“Consumers have successfully accessed £2.5 billion since April, but many are frustrated by the rules which the government has imposed,” said a spokesman.
“”We did not make these rules and we have offered some solutions to the government about how we can make the service smoother.”
