Responding to the DWP’s consultation ‘Simpler annual benefit statements: draft regulations and statutory guidance’ Kate Smith, Head of Pensions at Aegon, says a more joined-up approach to delivering pensions information is needed across government, regulators and the pension dashboard programme.
We welcome any initiatives which have the potential to improve savers’ understanding of their pensions and which nudges them into taking action.
Simpler, consistent annual benefits statements are clearly part of the jigsaw to enable this, but so are a number of other initiatives, primarily pension dashboards, which once up and running from 2023 will enable savers to see a clear picture of all their pension savings, not just those from auto-enrolment.
It’s vital that the information shown on simpler annual benefit statements is consistent with that shown on pension dashboards. A lack of alignment will be confusing, defeating the purpose of trying to improve engagement. To avoid this, these two initiatives should be joined up, rather than approaching this very thorny issue piecemeal.
Increasingly the pension industry is moving to digital first communications, which tend to be more engaging, allowing information to be delivered in targetted personalised bite-sized chunks, incorporating tools, enabling savers to model personalised ‘what if scenarios’ and including signposting to further information.
And many pension savers expect to access their pension information digitally on their phones, tablets and laptops.
We strongly believe that digital annual benefit statements would work much better, with the potential of improving savers’ engagements and outcomes, than paper-based statements.
A massive fly in the ointment is that simpler annual benefit statements will only apply to defined contribution qualifying workplace scheme used for auto-enrolment. Many savers will have historical DC workplace benefits along with individual personal pensions, so will continue to receive different annual benefit statements. This isn’t likely to aid their understanding. The FCA is about to consult on ‘non-workplace pensions’ and may have a view on bringing individual personal pensions into scope.
There are a number of moving parts to be nailed down and many overlapping initiatives on the go. We believe a more joined-up approach is needed across government, regulators and the pension dashboard programme to give simpler annual benefit statements a better chance of succeeding. Delaying the implementation date by a year to April 2023 allows more time for a more joined-up approach.”
