Minister presses ahead on simpler statements

Simple statement were first suggested by the 2017 automatic enrolment review. They set out to engage members who are confused or deterred from reading their statements by long, complex paper documents.

An example statement was developed by industry practitioners and released in October 2018, but pensions minister Guy Opperman said he is frustrated by the pace of improvements.

“Pension statements are too long, too wordy, full of jargon and confuse savers. People don’t read them, or if they do they can’t make head nor tail of them,” he said. 

“Simpler statements provide clear information that people will actually understand and this will encourage them to save more.”

Friday’s consultation asks for views on whether voluntary adoption will be feasible and sufficient, or whether new rules should be brought in to require simpler presentation. Design principles floated by the document include fees shown in pounds and pence, and a universal system for telling savers how much their pot will deliver in retirement.

“I want pension schemes to drive forward real change quickly but, if necessary, I will consider regulation,” Mr Opperman said.

“Savers who have more than one pension pot and receive more than one statement find it hard to compare them. Simpler statements will fix this,” he added.

The minister’s calls were welcomed by industry leaders, who said better information will improve the quality of decisions made by consumers about their retirement.

Lizzy Holliday, head of defined contribution, master trusts and lifetime savings at the Pensions and Lifetime Savings Association, said: “Simpler annual benefit statements, along with the pensions dashboard and the PLSA’s new retirement living standards, are a great example of good practice in providing savers with clear and concise information that helps them understand their pensions.”

However, providers also called for flexibility rather than strict regulation, arguing that this would allow for innovation.

Tom McPhail, head of policy at Hargreaves Lansdown, said: “Our preference would be for guidance rather than regulation, as that would leave room for individual firms to experiment and improve customer engagement, as well as building the statements in their other communication activity.”

He added: “We’re interested to look at the idea of a ‘pension statement season’. Eighty-five per cent of Hargreaves Lansdown pension customers log into their accounts every year, showing engagement does work, but we also know most of them don’t open their annual statements we’re required to send them.”