The government is to mandate the use of simpler annual benefit statements for defined contribution (DC) pension schemes, in a bid to improve savers’ understanding of their position, but implementation of an online pensions dashboard has been pushed back to 2023
The Department for Work and Pensions (DWP) proposals will require pension schemes to provide the two-page simplified statements and structure them in such a way that draws members’ attention to three key pieces of information.
These are how much money is in their pension pot; how much money they could have on retirement; and what members can do to give themselves more money in retirement.
The simpler statements will include a line on costs and charges and a clear signpost for a more detailed assessment of this information elsewhere to help members see what they have paid for their pension.
The initial focus will be on DC schemes used for automatic enrolment, with a view to later improving consistency across all schemes.
The DWP’s decisions follow a consultation held at the end of last year.
Guy Opperman, minister for pensions and financial inclusion, said: ‘For too long pensions have been shrouded in complexity and technical jargon, limiting people’s understanding of their savings and hampering their retirement planning.
‘Simple statements will usher in a new standard for how schemes communicate with their members – vastly improving people’s understanding and engagement with their pensions.’
DWP said simpler statements support the department’s ambition to make information about pension saving more accessible to consumers, running parallel to the department’s championing of the use of dashboards, an innovation that will allow savers’ pension information to be accessed on digital devices at any time they choose.
However, the latest update from the Money and Pensions Service (MaPS) on its pensions dashboards programme (PDP) indicates that a fully operational system will not be available before 2023, despite initial hopes that implementation would be earlier.
PDP has responsibility for designing and implementing the ecosystem which will make pensions dashboards work, and is currently at phase one, programme set up and planning, with development and testing due to start next year.
Voluntary onboarding will begin in 2022, and the plan is for staged onboarding and making dashboards generally available to take place in 2023.
Chris Curry, principal of the PDP at MaPS, said: ‘While dashboards are a simple concept, the delivery of dashboards will be complex and is reliant on collaboration between the PDP and many other organisations across government, regulators, dashboard providers, pension schemes and providers to complete actions at a specific time.
‘Already, through the qualitative research and the Call for Input, industry has provided useful insight into the challenges of verifying people’s identities and matching them to pensions.
‘We are working on defining our requirements for this, which will provide greater clarity. We will continue to work with industry to find and develop robust solutions to these and other challenges.
‘The first version of the data standards, which will be published in December, will enable industry to take action and take the next steps in making pensions dashboards a reality.’
Rob Yuille, assistant director, head of long-term savings at the Association of British Insurers, said: ‘The timeline is longer than we might have wanted but the project has now made tangible progress and reached key milestones.
‘The dashboards project requires complex digital infrastructure and collaboration across sectors – moving into the next phase, it is vital that government, regulators and industry continue to work as effectively as they have so far.’
Further reading:
Government response to consultation on simpler annual statements for workplace pensions
