You can’t help but feel sorry for the person (all right, people. But still) who has to read through the terms and conditions of 30 million old pension policies sold between the 1970s and 2000 and decide whether they were ‘fair’ or not. By policy number 29,999,999, everything is going to seem deeply unfair – whether or not it’s pension related.
Still, the Financial Conduct Authority says it has to be done: it’s worried that, as with energy companies, old customers have been penalised for their loyalty. Customers with old policies aren’t being given the same priorities as new customers, and even have to pay if they want to switch to a cheaper provider. Apparently, some customers lose as much as half their savings if they move.
That’s not all: among the FCA’s list of pension provider transgressions are the fact that ‘zombie’ funds (closed to new customers) are used by insurers to pay bills for other parts of the business; that changes made to investments benefit the companies, rather than customers, and that companies don’t review their policies regularly.
The big pension providers have already taken a kicking in the past few days, after George Osborne dropped his bomb on annuities. This morning their share prices dropped again: here’s what four of the biggest (Prudential, L&G, Aviva and Standard Life) did:
Source: Yahoo Finance
It’s hard not to wonder to what degree all this investigating (pension providers are on a government hit list that includes energy companies and outsourcers) will actually benefit consumers. It’s one thing to make some poor sod read terms and conditions agreements from the 1970s – it’s another to actually do something about it.
If government response to energy companies (scrapping green levies only to be faced with the rather embarrassing fact that prices are still rising) is anything to go by, the reality is that industries have to want to change if they’re really going to reform. Still, in the year running up to an election, it’s important for a government to look like it’s doing something, isn’t it?