'Financial services needs to seriously up its game with record-keeping'

But is too much 'off the record' when it comes to data? During my 40 years in financial services, I have come across thousands of cases where records were incorrect. More alarmingly, some were never even kept in the first place.

Even today platform transfers can go awry with incomplete data, as advisers know all too well.

This lack of basic financial hygiene has led to hundreds of thousands of people, and women in particular, receiving incorrect state pensions. And a few employees have even been cheated out of their full company pension.

Worse still, according to the Pensions Policy Institute an eye-watering £26.6bn in 2022 was held in lost pension pots, with an average loss pot size of nearly £10,000, largely because pension providers’ records are out of date. 

Of course, there are extenuating circumstances. High unemployment levels during the pandemic led to large numbers leaving jobs with pension schemes, creating a wave of lost pots. Moving house, marriage and divorce all add to the record keeping hiatuses.

We seem to be much better at slick marketing and investing than splashing the cash on the unglamorous back office

Roughly one in 10 people change their address every year – a Herculean task to keep up to date.

In 2021, 5.9mn people in England and Wales changed address from the previous year – 10.1 per cent of usual residents.

Some even change not only their address but their country of residence; 1.2mn people migrated into the UK and 557,000 people emigrated from it, leaving a net migration figure of 606,000 as of the end of June 2022. 

People get married and divorced. Indeed, marriage seems to be making a comeback since Covid – I have been to more weddings this year than in the past 20 years.

There were 219,850 marriages in total in England and Wales in 2020 but sadly, in 2021 there were 113,505 divorces granted in England and Wales (roughly one in two).

No wonder financial institutions struggle, but with tech could they not to do better?

Tech – help or hindrance

But is tech a help or hindrance? Who can now read their work on all old Amstrad computers from just four decades ago? How often do modern footnotes no long work because the link is broken and the work taken down?

I regularly write content for magazines and financial services companies – all so ephemeral. When the website is sold, or the work it is out of date, it is often taken down and lost – not even archived.

Occasionally, something needs updating; it is interesting to see the different treatment financial services firms give my work. Some religiously record the time of the change. Most do not. So, there is no record of the first draft of history.

At least with paper and parchment, there is a record – perhaps Ed Miliband who was mocked at the time for his "Ed Stone" was not so idiotic.

A recent British Museum exhibition "I am Ashurbanipal king of the world, king of Assyria" has lessons for us all. Ashurbanipal ruled the largest empire in the world at the time of his reign (669–c. 631 BC). Astonishingly, artefacts survive 2,500 years on, largely because accounts were written in stone.

I doubt whether much of today’s written work will be around in 50 years let alone 2,500 years’ time. A worry for us all?

Personal heartache

Inaccurate records have caused me heartache. In 2017 my redundancy compensation on the closure of Pensions World triggered a pension tax payment. I opted for scheme pays, that is, the pension scheme deducts the amount owing to HMRC from your pension and reduces your pension to make up for the payment.

All done and dusted, or so I thought until five years later in 2022 HMRC wanted to see the proof that the scheme had actually paid the money due – but where was it?

It was a period of unnecessary high anxiety and stress. Almost a nightmare, getting a letter out of the blue on the eve of the late Queen’s jubilee with the threat of daily fines unless HMRC received relevant documentation within 14 days.

My paid freelance work was neglected and income lost as I to’ed and fro’ed between HMRC, Willis Towers Watson (the third-party administrator), the pension scheme trustees and my former employer.

Fortunately, the tax payment was discovered to have been paid on time all along but recorded incorrectly in the wrong tax year. I had to plead for two time extensions from HMRC. Anyone else without my pension contacts would have found it a dystopian nightmare with no end in sight.

We all need to up our game; so, nudge your clients, keep good records yourself and vote with your feet if your financial institutions fail.

I regaled this story to an IFA – he was not surprised, remarking that the pension admin of most insurance companies was poor. 

Friends in their 60s have also experienced delay and real hardship, particularly in the first months of their retirement. Under ‘starters orders’ doesn’t always equate to a lightening response when it comes to retirement day.

Improvements will come with the new pension dashboards such as Standard Life’s.

We seem to be much better at slick marketing and investing than splashing the cash on the unglamorous back office, of pension admin with top tech, and highly trained, experienced and motivated staff to match the more visible roles of marketing and investment.

It could be you next

If a former editor of Pensions World can have problems with her pension, then almost anyone could can. You or your clients could be next.

The dashboards will help but could be more of a damp squib unless backed by a ‘big bang’ launch campaign fuelled with regular repeat advertising to make them as well known as the emergency number 999.

We all need to up our game; so, nudge your clients, keep good records yourself and vote with your feet if your financial institutions fail.

The Cinderella of pensions, data, too often gets short shrift. This must change. In the meantime, £26bn is going a begging. Make sure none of it belongs to your clients.

Stephanie Hawthorne is a freelance journalist