Stakeholder pensions will force IFAs and insurers to overhaul their administrative systems and impro...
Stakeholder pensions will force IFAs and insurers to overhaul their administrative systems and improve the levels of service scheme members receive, according to John Hayes chairman of Opra.
UK insurers typically have a poor administration infrastructure, which has lead to problems in late pension payments and in dealing with schemes that wind up, according to the authority's records.
Opra's casework has highlighted the fact that insurers and advisers often offer poor compliance support to employers and trustees. It also noted that 9.9% of cases referred to Opra's board for penalty involve some failure on the part of the insurer or adviser. In the workload of regulatory officers dealing with accounts that do not get referred to the board, it is estimated 40% involve some failing on the part of the adviser or insurer.
Hayes said: "In the more intractable cases, the insurer or adviser is regarded as culpable about 60% of the time. In addition insurers have added to the problems by the sale of a large number of group personal pensions schemes. The old scheme is closed leaving the trustees open to Pensions Act penalties and sanctions with no one in charge or the insurer or IFA particularly interested in clearing up the mess."
Stakeholder will put greater pressure on service levels as insurers move to become more efficient in the survival of the fittest environment that will evolve. The Government's new pension vehicle will place a greater emphasis on the importance of administration and the industry is likely to see massive growth in the use of the internet and telephone to handle inquiries and arranging pensions schemes.
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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