On the go: As the Department for Work and Pensions closes its consultation on simpler annual benefit statements on Tuesday, investment consultancy Hymans Robertson has called for more time to implement the changes.
The DWP consultation, which would require pension schemes to send simpler annual benefit statements to their members from 2022, stems from an idea first looked at by an industry group in response to the government’s review of auto-enrolment in 2017.
A collaborative effort from law firm Eversheds Sutherland was endorsed by the Financial Conduct Authority that same year.
The consultation, which launched in May this year, explained how statements will be required to show “in easy-to-understand terms” how much money an individual has in their pension and what has been saved in that statement year.
It was also noted that schemes would also be asked to provide an estimate of how much money the member could have for when they retire, and suggestions for what they could do to give themselves more money at retirement.
The new statements, which must consist of no more than two sides of A4 paper, will be available to members in the accumulation stage but not those drawing down benefits, and will not include members of hybrid pension schemes.
The regulations contain a transitional measure stating that they do not apply “to information concerning a member’s money purchase benefits that has already been given before April 6 2022”, per the consultation document.
Commenting in response to the deadline for submissions to the consultation, Greer Flanagan, senior consultant at Hymans Robertson, said: “The consultation proposes a two-page benefit statement, and with our experience of moving some of our clients to this we can already see both advantages and disadvantages.
“The proposed content is excellent, but the challenge is to contain any supplementary information while keeping it on two pages,” she said, while also pointing out that allowing pension schemes extra time to implement the changes could lead to better outcomes.
Flanagan explained: “Allowing an extra year for this to be put in place would not only ensure it is implemented correctly, but it will also enable these statements to be automated – which would be a huge step forward.
“We also question whether the proposed two-page benefit statement should be rolled out to all DC schemes rather than only to those used for auto-enrolment purposes.
“The reality is that members will receive a number of benefit statements from different pension administrators. It would be better for there to be consistency in format and content across all schemes to help members understand and engage with their pension,” she concluded.
