Angry pensioners are made to wait for their annuities

Pensioners are becoming more angry and frustrated with the system that in some cases is forcing them to wait up to three months before they receive a pension.

Some insurance companies are exceedingly slow in converting pension savings into an annuity or guaranteed income for life. There have been some moves in the industry to speed up the process, but the average time for the transfer of money from a pension fund to an annuity provider actually increased by eight days last year over the year before.

Hargreaves Lansdown, together with annuity provider Partnership, reviewed 7,000 cases over the last four years and found that while some providers could manage the transaction in ten days, many took much longer.

One example, Windsor Life, took 99 days to transfer the fund to another annuity provider. Lincoln Assurance took an average 73 days; NatWest took 59 days; HSBC 57 days. Pearl Assurance, Abbey Life, Sun Life of Canada, Wesleyan and Aegon all averaged between 40 and 50 days.

Nigel Callaghan, of Hargreaves Lansdown, said: “These delays are unacceptable, and too many insurance companies are simply not doing the right thing by their customers. What’s worse, thanks to the lack of any firm industry guidelines on this issue, these pension savers have no automatic grounds for complaint.”

Mr Callaghan could offer not acceptable reason for these delays. He went on: “Insurers have failed to invest in the appropriate resources to transact this business in a timely fashion, and if I were being cynical, I would suggest that given the difficult economic circumstances a number of insurance companies are simply trying to hold on to this capital for as long as possible.”

According to the Association of British Insurers (ABI) the delays are coming down, following an initiative to which eleven insurance companies have signed up. The ABI claimed that in the first quarter of this year pensions were being transferred in an average of eight days.

Nevertheless, advisors say that policyholders have not yet seen the benefit. Mr Callaghan felt there was not enough pressure being put on insurers to deliver a better service.

Frustratingly, the delays can actually reduce pension income. With annuity rates only being guaranteed for 14 days, they can disappear and worsen before being delivered to the pensioner, especially as annuity rates are currently on the slide. Even worse, pensioners are still charged annual management fees in the period.

Action certainly needs to be taken to correct this issue now.

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