BLOG: It’s time to bring the pensions dinosaurs into the 21st century

0
Written by: Ben Stanway
25/11/2019
Listening to the Queen’s speech last month , I was pleased to hear the commitment to making pensions simpler and providing more protection for consumers.
BLOG: It’s time to bring the pensions dinosaurs into the 21st century

The pensions industry has been confusing people for decades. Long transfer times, hidden fees and jargon all contribute to an opaque and confusing system which drives public apathy towards one of the most important financial products we will ever have.

Auto-enrolment has been a huge step forward with more people paying more money into their pensions than ever before. But with the average person having 11 different jobs during their lifetime, old pension pots can be hard to keep track of and traditional providers are failing to provide a proper service to their customers. They make everything confusing and difficult, sending letters to addresses that customers no longer live at written in financial jargon no one understands.

Polling of 25-40 year olds shows that 50% of people with old pension pots cannot even name their providers, while 60% don’t know how to access their pots, 87% don’t know what their money is being invested in and 89% do not know what fees they are being charged.

How did it come to this? At the crux of the issue is the fact that workplace pension providers were originally set up to serve businesses, which they do to a generally high standard. Things begin to unravel when an employee leaves a business, and the provider is forced to take on a different role and provide direct service to an individual. This requires an entirely different set of capabilities, which traditional providers simply do not have.

The rise of apps

So why are people not demanding change?

Low engagement is crucial here. People barely consider switching due to lack of awareness, and if there is no threat of switching, why should providers improve the service they offer? In a situation a little reminiscent of Stockholm syndrome, the more the customer is ignored, the less likely they are to leave.

Thankfully the rise of investment and banking apps is changing the relationship people have with their money. We increasingly expect services to be delivered in a clear, transparent and personalised way by companies that make their customers their number one priority. Pensions will not be left behind.

A first step towards improvement would be the pensions bills we urgently need. Legislation – written in 1993 – states that providers have six months to complete a transfer. That simply does not work for the fast-paced culture we now live in. For reference, in 1993, Meatloaf was no. 1 and Jurassic Park was the summer blockbuster. It feels like change can’t come soon enough – the industry dinosaurs need to be dragged into the 21st century, with transfers taking no more than two weeks to complete at a maximum.

Here at Moneybox, we are committed to building a pension that is designed for the way we live today. Customers have been getting a rough deal for years and we’re not going to stop until we change this.

Ben Stanway is co-founder of Moneybox, the savings and investment app

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

10 ways to claw back money from HMRC

For the millions of people who put off filing their tax return, here are 10 incentives to get it done.
10 ways to claw back money from HMRC

Scammers posing as bailiffs to fleece victims of cash

The government is urging people to be on guard as fraudsters are posing as bailiffs and enforcement officers t...
Scammers posing as bailiffs to fleece victims of cash

Unused credit cards expose holders to greater fraud risk

Brits with unused or emergency credits cards are twice as likely to fall victim to identity theft or fraud, re...
Unused credit cards expose holders to greater fraud risk

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
Energy customers return to Big Six after string of small supplier collapses

More than 100,000 households switched from a small and medium-sized supplier to a large provider in October, according to Energy...

Close