DWP consultation on Simpler annual benefit statements - Which? response

Which? strongly supports the Department for Work and Pensions’ (DWP’s) aim to help individuals engage with their pensions by making annual benefit statements simpler. Which? supports the option proposed by DWP for a mandatory template, which would improve standards across the sector and ensure greater comparability for consumers when looking across their different pension schemes. We also recommend that any new requirements apply to all defined-contribution pension schemes, rather than just auto-enrolment schemes.
Some flexibility in how some schemes present information, which is often via digital statements and may benefit from innovation in the future, could lead to even better outcomes if schemes have clear evidence as to what works best for their savers. We therefore propose that schemes would be able to use a different approach to the mandatory template if they can evidence, through research and testing, that this provides better outcomes than the template. As well as raising a person’s awareness and understanding of their savings held with that scheme, schemes should have to evidence that savers are able to understand and compare information across their other pension savings.
Which? strongly supports the DWP’s proposal to require pension schemes to show each saver personalised pounds and pence costs and charges information on annual benefit statements. However, rather than providing separate figures for costs and charges, consumers should be shown a single price, as this is by far the most important and relevant piece of information for most savers. Schemes should also have to warn savers where assumptions and averages have been used to provide a representative personalised figure.
We support the DWP’s proposal to take ownership of the rules around how pension schemes calculate projections of what an individual’s pension savings could be worth, so that these rules can be standardised.
The core data that schemes are required to show on annual benefit statements should be mirrored on pensions dashboards so there is consistency in the information that consumers see across different channels. At the earliest opportunity, dashboards should therefore include a standardised figure for the costs and charges paid by the saver for each of their pensions, and a standardised retirement income projection.
A statement season, as happens in Sweden, could help to drive engagement with pension statements, if there is a coordinated campaign to help raise awareness. But given the lack of compelling evidence and the need for pension schemes to transition to any new timetable, which may require them to amend their reporting period, the DWP should conduct a detailed cost-benefit analysis.

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