BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 

Tuesday, 3 July, 2001, 12:09 GMT 13:09 UK
Pension industry's 'scandalous practices'
Pensions can be confusing
A "radical solution" is needed to clean-up the pensions industry
The Pensions Advisory Service has attacked the UK pensions industry, accusing it of complexity, bad communication and sloppy administration.

It singled out insurance firms for "scandalous practices" which include ill-defined contract terms and hidden charges.

It also encourages the Inland Revenue to act quickly over "rigid and inflexible" tax laws.

The Pensions Advisory Service (Opas), a government-funded watchdog, received a record number of complaints in the year leading up to 31 March 2001 and is now calling for a "radical solution" to clean-up the industry for good.

The criticism follows a recent announcement by the Financial Services Authority (FSA) that it was launching a probe into an additional 151 pension schemes over possible mis-selling.


We see repeatedly that pensions are a maze in which it is easy to become lost, confused and disorientated

Malcolm McLean, chief executive of Opas

The report "Helping people through the pensions maze" also attacks trustees of occupational schemes.

Opas is critical of employers who use their pension schemes to dissuade their employees from leaving their company by threatening to stop their benefit entitlements.

Trustees who decide in some cases not to pay a pension when an employee has retired due to ill-health have also been criticised.

Malcolm McLean, chief executive of Opas said: "We see repeatedly that pensions are a maze in which it is easy to become lost, confused and disorientated. The situation should never have been allowed to develop as it has."

Record year

Opas, which is funded by the government, runs an advisory service for members of the public staffed by pensions professionals.

They deal with problems arising over private pensions, including company, personal and, since April 2001, stakeholder pensions, as well as providing general advice.

Such is the demand for clear and impartial advice, the watchdog's work has hit record levels.

Stakeholder pensions launch
Opas has praised the new stakeholder pensions, but some are confused

In the year ending 31 March 2001, Opas received 36,322 enquiries and complaints - a 12.9% increase on the previous year and the largest annual caseload received by Opas in its 18-year history.

If Opas believes that a person has a legitimate complaint it will advise them to make a formal complaint to the Ombudsman.

Last year it referred 351 cases, compared to 251 the previous year - an increase of 35%.

The watchdog is now so swamped by enquiries that it is appealing to more pensions professionals to join the existing 477 volunteers who work for the organisation.

Common complaint

The watchdog has reported that there is "substantial pent-up demand" for advice on pensions.

A breakdown of complaints from last year revealed that the most common problems with personal pensions centred around sales, marketing and mis-selling - attracting almost one third of enquiries.

Contract terms and maladministration were also common problems - combined they accounted for almost half of all problems voiced by consumers.

Stakeholder pensions, which were introduced in April 2001 and aim to offer low charges and a transparent product, have in fact caused their own problems.

More than one third of people who contacted Opas about stakeholder pensions had a complaint about promotional literature requests - despite the fact that pension companies are engaged in a war over new business.

Search BBC News Online

Advanced search options
Launch console
BBC RADIO NEWS
BBC ONE TV NEWS
WORLD NEWS SUMMARY
PROGRAMMES GUIDE
See also:

24 Jun 01 | Business
Employers pay up for pensions
24 Jun 01 | UK Politics
Commons pension fund under fire
20 Jun 01 | Business
Pensions and benefits shake-up
04 May 01 | Business
Will you have enough to retire on?
06 Apr 01 | Business
New pensions go on sale
30 Mar 01 | Business
Could it happen again?
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories