The Estate Registry warns that pension delays affecting public sector workers show why families must have a clear plan for their finances, assets and affairs.
Thousands of public sector workers and their families are being pushed into financial hardship by pension administration failures – with some relying on credit and benefits, struggling to pay care fees and even delaying retirement because they cannot access money they are entitled to.
The Estate Registry, which is a leading UK expert in estate planning, says the continuing crisis surrounding Capita’s administration of major public sector pension schemes is a stark reminder that financial planning cannot stop at retirement.
Howard Enders, chief operating officer for The Estate Registry says: “For vulnerable people, including seriously ill individuals and bereaved spouses, delays in accessing pensions can have consequences that go far beyond inconvenience.
“When a pension is a household’s primary source of income, weeks or months without payment can mean bills going unpaid, savings being depleted and families being forced to borrow simply to stay afloat.”
The commons public accounts committee has repeatedly challenged Capita over the backlog and failures affecting pension administration.
Committee chair Sir Geoffrey Clifton-Brown has described the situation as a “slow-motion disaster”, warning of the human impact on former civil servants waiting for money they are rightfully owed after years of public service.
One MP also accused Capita of failing significantly on basic customer service, including answering telephone calls and handling correspondence, and highlighted the “devastating human cost” of the failures.
Meanwhile, the public and commercial services union and prospect have called for urgent government action over Capita’s handling of the civil service pension scheme.
But Enders says the crisis exposes a wider problem: families often underestimate how dependent their financial security is on systems they do not control. He continues: “We tend to think of estate planning as something that happens when someone dies. It isn’t. Good estate planning is about making sure your affairs can be understood and managed when life doesn’t go according to plan.
“A delayed pension can be financially devastating for someone who has retired, is seriously ill or has recently lost a spouse. If the family doesn’t know what assets exist, what income should be arriving or where important financial information is held, an already difficult situation can become considerably worse.
“The Capita situation is a powerful reminder that people need to prepare for uncertainty rather than assume everything will work perfectly when they need it most.”
Following scrutiny from the public accounts committee, Capita was required to submit a recovery plan to the Government. An independent adviser has been appointed to scrutinise Capita’s progress, including its underlying technology systems and assumptions.
The cabinet office has said interest based on the Bank of England base rate plus one percentage point is being applied to delayed pension payments, while compensation is available on a case-by-case basis.
However, MPs have also raised concerns about the complaints process. Sir Geoffrey Clifton-Brown told the committee that Capita’s member portal was not working properly, and complaints submitted through the system had effectively disappeared into a “black hole”.
The Estate Registry says the pension crisis highlights the importance of having a complete and accessible record of an individual’s financial affairs.
That can include pensions, property, savings, investments, insurance policies, bank accounts, liabilities and key legal documents – alongside clear information about who should be contacted if someone becomes seriously ill, loses capacity or dies.
For families, knowing what exists, where it is and who needs to be contacted can remove an additional layer of uncertainty at precisely the moment they are least equipped to deal with it.
The organisation is urging people approaching retirement, supporting elderly relatives or reviewing their estate arrangements to take a broader view of estate planning and ensure pensions are included in the process.
Enders adds: “Nobody can plan for an outsourcing company failing to deliver the service they expect. But people can plan for the consequences of disruption.
“The most important question is not simply ‘What will happen to my estate when I die?’ It is also ‘Could my family find everything they need if I couldn’t deal with my affairs tomorrow?’
“That is what effective estate planning is really about – protecting people from unnecessary uncertainty when circumstances change.”
This article was submitted by The Estaate Regsitry as part of an advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the advertiser and not those of Today’s Wills and Probate.
