Pension wake-up packs 'arrive years too late'

Provider ‘wake-up’ letters to pension clients nearing retirement arrive years too late, are too complex and should be scrapped, Just Retirement says.

The group says the letters, recommended by the ABI, should be replaced by a "much clearer" series of communications between providers and customers starting at an earlier point in the pre-retirement process.

It is calling for the establishment of an independent communications "czar" to police guidance offered by ceding providers. Failure to comply should result in the business being automatically put through the Open Market Option (OMO), it recommends.

According to ABI research, seven in ten pensioners who read the pack said it gave them a better understanding of their options at retirement, and awareness of the right to shop around increased from 62% to 82% after reading it

But Just Retirement sales and marketing director David Cooper says "We are exceptionally disappointed at the pace and nature of the industry's progress on this matter. Despite several industry initiatives, it is now clear the current process is not fit for purpose.

"Regardless of the clarity of any communication, expecting customers to make very important decisions that close to their retirement with no previous guidance is unacceptable."

The provider says it set up a focus group to assess company's ‘wake-up' letters, which concluded there was too much information to digest and some were overlaid with "threatening" legal disclaimers, warnings and short deadlines.

It says respondents felt strongly providers were more interested in protecting their own positions than informing their customers.

Additionally, there was not enough time to consider the implications. It says respondents were "shocked" to understand this information was only available to customers months before retirement.

All respondents stated they would prefer to have a series of communications, it claims, explaining their options more clearly and starting a very much earlier stage of the pre-retirement planning.