24 April 2008
Rules protecting savers approaching retirement from massive
delays in receiving their pension have been quietly ditched by
insurance companies. Savers who switch their pension savings
between firms to get a bigger retirement income can be left waiting
for weeks or, sometimes, even months.
Now, industry body the Association of British Insurers (ABI)
admits it has scrapped guidelines which said insurance companies
should pay out savings within ten working days of receiving all
documentation. Instead, insurance companies must pay out savings by
the retirement date specified on pension documents, normally on the
60th or 65th birthday.
The ABI's new guidelines say that if a company misses the
'selected retirement date', it should explain why and consider
paying missed interest if it decides there has been a significant
delay.
The ABI claims the new guidelines are not being watered down. A
spokesman said: "This is a more stringent target. By having a set
date to work to for each saver, insurers' efforts will improve. But
we recognise this will not happen overnight."
Just a third of savers shop around for the best pension rate by
taking the 'open market option.' Most end up buying one from their
existing pensions firm even if it offers them a poor deal.
