• The DWP has today published its response to a consultation on simplifying the annual benefit statements pension customers receive (https://www.gov.uk/government/consultations/simpler-annual-benefit-statements-for-workplace-pensions/outcome/government-response-simpler-annual-pension-benefit-statements)
• Government concerned existing statements are “lengthy, inaccessible and inconsistent in design and content”
• Reform plans centre around creating a standardised, two-page annual benefits statements for workplace pensions
o Simpler statements will ‘signpost’ to detailed information on investments and charges
• DWP also investigating merits of introducing a ‘statements season’
Tom Selby, senior analyst at AJ Bell, comments:
“Sending people big fat envelopes packed with impenetrable jargon – as has too often been the approach in the past - is a bad way to inform and engage people with their retirement savings.
“The Government’s focus on this area has the potential to act as a catalyst for much-needed simplification and create a platform for the reinvigoration of pension communications more generally.
“The ‘less-is-more’ approach set out by DWP feels like the right one, and if we can move to a world of greater simplicity and consistency for annual benefit statements that can only be a good thing.
“The idea of creating a ‘statements season’ is interesting and could get over the hurdle of people simply throwing statements in the bin without even reading them.
“As the DWP moves forward with these plans, co-operation with regulators – and in particular the FCA – will be critical in ensuring the new framework is applied consistently by different types of pension scheme.
“This is the right time to put in place a review of all disclosure to all pension consumers, both paper-based and online. It’s important we help people understand what their pensions are worth to them, the value they offer, and, as part of that, what they pay for them.
“We need to address the lack of on-going engagement. We need to be sure people read and understand all communications, and that they are truly meaningful and significant to them. This is an essential part of understanding how people view, and then evaluate, value for money.”
