Simplified pension statements on the horizon
21 October 2020
The Department for Work and Pensions (DWP) has confirmed, in its response to the consultation it published on the topic of simpler annual statements, that although shorter and simpler statements are ambitions for schemes, the majority of them have not voluntarily adopted the statement template, freely available to them.
On the topic, it stated “progress remains too slow and is not delivering consistent results”, and “it is unlikely that the voluntary adoption of any approach will lead to sufficient progress across providers as a whole.”
Subsequently, the DWP intends to consult later on in the year in relation to making simpler statement templates for Defined Contribution (DC) schemes used for Auto-Enrolment (AE) mandatory. The two-page statement that was initially constructed during the 2017 AE Review will be used as the starting point in terms of the length, content, and design of pension statements to be used in the future. DWP will work alongside experts in the industry to produce an in-depth design of the template.
Although this will primarily only apply to DC schemes used for AE, the long-term goal of the Government is to increase consistency across all schemes.
The intention is for these simplified statements to draw attention to several primary points of concern for savers:
- How much money is in their pension pot
- How much money they could have at retirement
- What they can do to give themselves more money in retirement
Pensions Minister, Guy Opperman said:
“For too long pensions have been shrouded in complexity and technical jargon, limiting people’s understanding of their savings and hampering their retirement planning.
Simple statements will usher in a new standard for how schemes communicate with their members – vastly improving people’s understanding and engagement with their pensions.
With more people saving for their retirement than ever before thanks to Automatic Enrolment, it’s vital they can understand what’s going on with their hard earned money and actively plan for their future.”
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