Lifesight, NOW: Pensions, Options For Your Tomorrow among pension providers named 'worst for customer service'

Pension providers come under fire for poor customer service, lack of transparency, and questionable handling of data.

Are you happy with your pension provider? If not, you’re certainly not alone, judging by the rise in complaints numbers reported by the Financial Ombudsman Service (FOS).

The FOS is an independent arbiter that you can take a complaint to if a financial firm doesn’t address your concerns adequately, and it reported receiving 20,854 complaints regarding investments and pensions in 2020/21.

That’s up by a whopping 91% on the previous year.

But which firms are most likely to provoke our ire? And what’s driving those complaints? 

That’s what a new study by pensions business Penfold looks into.

The worst pension providers

Penfold has turned to Trustpilot, the website that allows people to score and review the various businesses they interact with, to get a sense of which pension firms are most likely to have unhappy customers.

Here’s how the various pension providers shape up, based on Penfold’s study:
 

Nest Pensions for example was established as the state-backed provider for auto-enrolment when the workplace pension rules were first introduced, and as a result, it’s a really big player when it comes to pension saving.

The People’s Pension and NOW: Pensions are also significant names when it comes to workplace pensions, which may explain why two of them have such large numbers of reviews compared to their rivals in this list.

There’s also a fair deviation when it comes to the overall scoring ‒ given the maximum mark is five, I’m not sure Nest or The People’s Pension’s scores can be classified as particularly bad, certainly compared to those scoring less than two on average.

What are we complaining about?

Of course, it’s one thing to know that a pension firm has a mediocre score on Trustpilot, but that doesn’t really tell us what issues are causing that score.

Penfold went through those reviews to pick out some of the more common complaints, the typical things that upset savers about their pension providers.

And it found that the most frequent issues were poor customer service, a lack of transparency, and unreliable handling of data and finances.

When it comes to customer service issues, the reviews often picked out problems like automated calls, being difficult to contact whether by phone or email, and appointments not being kept.

The transparency complaints often focused on fees, with savers being whacked with sizeable penalties for withdrawals and the like, which they felt had not been made clear at the outset.

There were also concerns over data security, with some reporting being sent information of other savers, or even having their personal details lost by their provider.

Why the choice of pension provider matters

The workplace pension scheme has been a tremendous success when it comes to getting people into the habit of saving for their futures.

Before the scheme, it was all too common for workers to put off worrying about their pension until it was too late, viewing it as something they would turn their attention to later on.

However, now that bosses are forced by law to open a pension on behalf of their staff ‒ and contribute towards it ‒ more than 10 million people have been enrolled in schemes since the launch of auto-enrolment, though there are still challenges ahead when it comes to saving a sufficient amount for a comfortable retirement.

One of the downsides though is that individual savers don’t have any agency when it comes to selecting a pension provider ‒ it’s the bosses that select the pension firm, meaning that we can’t do the usual shopping around that we might carry out when setting up any other type of financial product.

There’s not a lot we can do about that ‒ it’s better to get the additional contributions from the employer and put up with a pension provider that isn’t great at picking up the phone, than opt out of the workplace pension and save somewhere else.

However, it is important for all of us, no matter what pension provider we end up being placed with, to get to grips with exactly what sort of fees are being charged and to understand what options are open to us if the performance of our pension savings aren’t up to scratch.

Simply saving a few quid every month, and hoping that it will eventually be enough to cover our costs when we give up work, isn’t going to cut it.