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Pension delay complaints rise 10%

18 May 2009

According to provisional figures from the Pensions Advisory Service (TPAS), complaints about poor service by pension providers have risen 10 per cent over the past year in spite of industry efforts to tackle the long -running issue of annuity transfer delays.

The number of complaints TPAS handled about personal and occupational pension policies climbed to nearly 8,000 in the year to the end of March.

Delays by insurance companies in processing paperwork or paying benefits caused the most concern for policyholders, with these doubling.

Chief Executive, Malcolm McLean said: "The year has hardly been encouraging. While volatile economic conditions are no doubt partially responsible for the increase, we suspect once more poor customer service remains the underlying problem."

Complaints about delays were either in getting quotations, in completing the open market options or in paying benefits, both on retirement and death. About a third of the TPAS complaints for the period concerned policies from life offices with closed books.

"Closed schemes devote a minimum of resources to these books so their level of customer service is often very low", says Mr. McLean.

TPAS is to publish full details about its complaints in its annual review in July.

But the overall picture of declining service standards came as the industry highlighted improvements to annuity transfer times. The Association of British Insurers (ABI) said a new system, dubbed the "Options initiative", had cut the average time to transfer an annuity from one pension provider to another to just eight calendar days from about a month previously.

A total of 16 providers are signed up to the new system - representing 90 per cent of the annuities market - although 14 providers are currently using the system. These are Aegon Scottish Equitable, Canada Life, Friends Provident, Just Retirement, Legal & General, LV=, MGM Advantage, Norwich Union, Partnership, Prudential, Standard Life, Axa, Pearl Group (including Resolution) and Skandia.

Scottish Widows and Zurich were expected to go live "shortly". Windsor Life said it was still evaluating the system and considering whether to join.

 

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