Why simpler annual statements could mark the start of better member engagement
Jonathan Stapleton says that, while the production of two-page simpler annual statements is no panacea for member engagement, it is a welcome step in the right direction.
Like many, I have two box files and a folder brimming over with the old annual statements and associated pension communications sent to me over the past 15 and more years.
As a conservative estimate, I would say I have over 1,000 pages of pensions bumf, none of which I am likely to read, none of which I will ever bring myself to throw away.
But even if I did get around to reading all of what I had been sent, I think I would struggle to understand them - even the newer more engaging ones, which are beautifully designed and personalised booklets a mere 36 pages long.
The trouble is, I think, they contain just too much information - did I really want to know the securities lending policy of my funds? And if I did, should this have been included in my annual statement?
This is why I agree with the announcement by pensions and financial inclusion minister Guy Opperman that the Department for Work and Pensions will set out plans to mandate the use of simpler annual statements - the concept originally developed by Ruston Smith and the teams at Eversheds Sutherland and Quietroom.
The simpler statements will be no longer than two pages and will give people the key information they need to get to know their pension by telling them: how much money is in their pension pot, how much money they could have when they retire, and what they could do to give themselves more money in retirement.
This approach, of course, has its downsides. First, it will only apply to auto-enrolment defined contribution schemes in the first instance. And costs and charges information will not appear on the face of the statement, although a link to this information will be provided.
Some have also criticised the fact that such a short, standardised statement will not allow the use of graphics or imagery to make it more readable for members.
The consistency of such statements will be, however, another great advantage of the statements. My annual statement from provider A will look exactly the same as the statement from providers B and C. And if the minister's idea of a ‘statement season' takes off, they will all arrive at the same time too.
Who knows, when the first of these statements arrives on my doormat, I might actually be tempted to read it. And after reading it, I might actually do something with the information it contains.
Jonathan Stapleton is editor of Professional Pensions
Contact him at: [email protected]
Connect with him on LinkedIn at: https://www.linkedin.com/in/jonathanstapleton/
Follow him on Twitter at: https://twitter.com/jonstapleton
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