Pensioners left waiting weeks for money

By Jennifer Hill

LONDON (Reuters) - Some of Britain's largest insurance companies are taking weeks to pay out pension money -- and the industry body has quietly ditched rules designed to protect savers from delays.

Insurers are taking an average of 20 working days to release savers' pension money, according to a survey by annuities firm Partnership Assurance, with many household names taking five weeks or more.

The lengthy turnaround times are netting insurers vast sums of money and come despite the Association of British Insurers (ABI) previously stipulating that it was good practice to transfer pension funds within 10 working days of receiving all documentation.

Nigel Callaghan, a pensions analyst at independent financial services firm Hargreaves Lansdown, said: "If they (insurers) can keep hold of billions of pounds for 20 or 25 working days, then how much money do they make?

"All too often, consumers are being left high and dry as they are made to wait weeks or months before their annuity is set up, simply due the commercial cynicism of too many pension companies."

Household name insurers are among the worst offenders, according to the Partnership Assurance data, which covers the past three years and looks at more than 6,000 cases.

Axa took an average 28 days to release funds in the past year, Aegon, which owns Scottish Equitable, took 26 days, and Legal & General 25 days.

Other big insurers have a better track record: Norwich Union took 14 days, a figure that has remained static since 2006, while Standard Life has improved its pay-out times to 10 days in 2008 from 15 in both 2007 and 2006.