As pension complaints increase, RSM UK asks are master trusts working?
FCA Complaints Data for H1 2024 released on 24 October shows 93,023 pensions and decumulation complaints, a 7% increase compared to H2 2023, which saw 86,885 complaints. With 73,069 pensions and decumulation complaints in H2 2022, the data represents a 27% increase in pensions complaints in 18 months. The majority of complaints related to general admin and customer service.
Commenting on today’s data, Ian Bell, head of pensions at RSM UK said: “This increasing trend should be concerning to the Pensions Regulator and the pensions industry as the reasons behind it need to be understood. Over the past decade, large insurers’ master trusts have taken on the pensions of thousands of customers from many organisations. But how geared up are they to handle increasing demand for draw down, and who do customers turn to when things go wrong? The increasing trend of complaints demonstrates that escalation procedures clearly aren’t working effectively.
“Prior to the growth of master trusts, customers could get immediate and personal support from the administrators of their defined benefit schemes, making drawdown straightforward. If matters weren’t addressed appropriately, the trustees of those schemes could be approached. The market for master trusts has grown rapidly in recent years and is now starting to consolidate to fewer providers. Whilst volume was always the inevitable commercial driver for these businesses, this data suggests they may be struggling to meet increasing customer demand.
“I anticipate we may see this trend of increasing complaints continuing in the FCA’s H2 2024 data, as more people have recently attempted to draw down their tax-free lump sums, anticipating potential changes to the tax treatment of pensions in the Budget. Some intervention is clearly needed to make sure that the increasing trend is addressed now.”
