“Anything designed to improve savers’ engagement with their pensions should be welcome. The industry recognises that currently annual benefit statements can be too long, use jargon, include complex regulatory information and a multiplicity of numbers largely driven by ever changing regulation All this means that savers either don’t read the documents, or if they do, find them confusing and where they have multiple pensions, inconsistent.
“We welcome the proposal to have simpler projections by standardising assumptions across all pensions with a move to using the FCA COBs rules. This will give savers more consistency and should be used as a building block for how pension are shown on the pension dashboards.
“Rather than investing in orange envelopes, the government should focus its attention on getting pension dashboards up and running and publicising these. Allowing savers to see all their pensions in one place online, rather than collating numerous statements, even if shorter, is a much better way forward.
“Annual benefit statements are just one way to engage with savers about their pension savings. There is no silver bullet and pension providers are always looking for innovative ways to engage pension savers, such as launching personalised animated video summaries. Developments like these capture people’s imagination and hopefully motivate them to take saving for retirement seriously.
“The tide is moving towards greater pension charges transparency, and savers should have access to how much their pension costs in pounds and pence. But this could prove to be a double-edged sword, as the inclusion of more information could lead to more confusion, with potentially a list of numerous costs and charges which will vary by fund. Pension providers may need to explain why the charges vary and what benefits they are paying for to avoid savers making hasty decisions. This may blunt the ambition to move to simpler shorter annual benefit statements.
“Trust-based schemes already have to provide cumulative effects of transaction costs and charges in the Chair’s statement and signpost this in annual benefit statements with similar provisions being considered for contract-based schemes. The government should monitor whether the inclusion of this information is effective before introducing more personalised costs and charges on annual benefit statements.”
|
