The ABI has hit back at accusations from pensions minister Ros Altmann that providers have failed to ‘get their act together’ to deliver freedom and choice flexibilities.
Speaking on Nicky Campbell’s Radio 5 breakfast show this morning, Altmann responded to criticisms outlined in the Daily Mail that the reforms were becoming a shambles by blaming providers for failing to do more to facilitate them, suggesting they had not ‘stepped up to the plate’, having had ‘over a year’ to prepare for the reforms.
The attack on the pensions industry has provoked a curt response from the ABI, which issued a statement ‘setting the record straight’ that set out how its members had answered over 1 million phone calls from customers as a result of the reforms, an 80 per cent increase on normal volumes.
Altmann was challenged on a series of issues faced by retirees wanting to access their pensions, including high withdrawal charges, refusal to allow partial withdrawal, anger at the requirement to pay for advice for funds over £30,000 and delays in withdrawals.
She said the government had powers to force providers to behave better towards consumers, including the power to levy charges on decumulation and the requirement to treat customers fairly, but wanted to wait for the reforms to bed in before taking action.
But some industry figures have pointed out the reforms are permissive not mandatory, meaning providers are not legally obliged to offer full flexibility. They add that the regulations for the reforms where only enacted in the autumn, and the second line of defence was only brought onto the rule book in January of this year.
Altmann said: “It is obviously disappointing that the industry, having had over a year to prepare for this, doesn’t seem in many cases to have got its act together in the way many customers had hoped.
“I am very disappointed the pensions industry itself is causing the problem. The government wants people to have access to this money but the pensions industry has to be able to step up to the plate, and if companies are dragging their heels and things are not working well then the government is putting them on notice that we will do something.”
“As pensions minister I say people should not be in a rush to take money out of their pensions. The best thing you can do is leave it in your pension until later in life.
“We want people to be treating customers fairly and if that means implementing controls on unfair charges, we have the power to clamp down on that. But you can’t expect the government to rush in two months after the reforms have started and say ‘it’s not working, it’s got to change’.
“You can’t say it is all going wrong. Pension freedom is up and running. Financial advice can’t be free – you have to pay for it.”
ABI long term savings policy director Dr Yvonne Braun says: “Insurers are committed to making the pension reforms a success and are rising to the challenge, working around the clock to deal with the huge demand from customers. The vast majority of customers have been able to access their pot. As we have said before, the biggest overhaul of pensions in a generation introduced in just a year was always going to be a challenge, and where issues occur the industry is committed to working closely with the Government and the FCA to resolve them.
“It is important to remember that there is no one size fits all option, especially for those customers who may have valuable pension guarantees or who could be facing tax liabilities, which is why the industry is encouraging people to contact the free, impartial Pension Wise service for help in assessing their options.”
Barnett Waddingham consultants Malcolm McLean says: “It’s alright Ros criticising the industry, but someone has to take action to put things right. The government agreed in setting up these rules that it would be discretionary, not mandatory. They can huff and puff all they like. Now they are saying ‘though we said this, we didn’t mean it’.
“And providers haven’t had a year to implement these reforms because the regulations weren’t made until the autumn and the second line of defence came out in January.”