DWP publishes new consultation for simplifying pension statements

The Department for Work and Pensions (DWP) has published a new consultation on simplifying the annual statements sent to defined contribution pension scheme members.

The DWP said it is looking at how to deliver better annual workplace pension benefit statements that are shorter, simpler and have information that is easy to understand, to help members plan for the retirement they want.

The consultation focuses on the presentation of information about costs and charges that can help members keep on top of what they have paid into their pensions, and recognises how the DWP can help members identify if their savings are on track.

The DWP's consultation is aimed at occupational and personal pension scheme providers, trustees and managers; pension scheme members and beneficiaries; other industry bodies and professionals; civil society organisations; as well as any other interested stakeholders.

Head of policy at Hargreaves Lansdown, Tom McPhail, commented on the announcement: “We have to make it easy for people to make good decisions.

“The use of simpler annual statements, better information disclosure, and messaging techniques to promote the socialisation of engagement all absolutely make sense.

“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.

“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.”

The consultation also acknowledges that the advent of Pensions Dashboards provides an opportunity to rethink the way information is presented to savers.

AJ Bell senior analyst, Tom Selby, added: “We know through various behavioural economics trials that the way information is presented to people can have a significant impact on the decisions they make.

“App-based technology is changing the way we interact with our finances and has the potential to push through a genuine retirement engagement revolution.

“In that context, now is the right time to think radically about how communications can be simplified to the benefit of members, with digital platforms at the forefront.

“It is vital the Government works with all relevant regulators, including the FCA, to ensure the information requirements are consistent across different types of pension scheme.”

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