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Pension statements: industry-led members’ costs and charges initiative issues report

Pension Savers want Costs and Charges presented on Annual Pension Statements

New research, led by Ruston Smith, and carried out by Ignition House, shows that pension savers want to know what their pension is costing them with figures presented on annual pension statements.

Building on the work to implement simpler pension statements, which will soon be made law by the Government, this research was commissioned to address one of the big unanswered questions in the development of simpler statements – whether and how to display costs and charges.

Currently there is no requirement to include the consistent disclosure of the costs and charges that pension savers pay to their provider for running their pension scheme. This is a significant gap in the information provided to savers.  So far, there has been no agreed approach about whether this information should be shown and the best way to do it on annual pension statements across all trust and contract based schemes.

To tackle the subject head on, Ruston led a cross-industry initiative, backed by independent research, to ask savers what they wanted and expected to see, and importantly how they would like it presented.

The conclusions were clear:

  • Members are more interested in the value of their pension savings than the charges they pay
  • The majority of members weren’t aware that they were paying charges but, equally, they were not particularly surprised to see them
  • Members want pension providers and schemes to show and explain the charges they pay simply and consistently on all the annual pension statements they receive – which they say will build trust
  • If providers and schemes couldn’t provide individual members charges, members would think they were untrustworthy – transparency leads to trust

The method and content of the research was agreed by the Pensions Regulator, DWP, the FCA and industry representatives to make sure that it was carried out independently and robustly – so it can be used to make a real difference. The conclusions of the research have been passed to the DWP as they consider how to use and apply the findings.

On launching the research findings, Ruston Smith, said:

“Not surprisingly, it’s the value of members’ savings at retirement that matters most – the money in their retirement pot.

“But members also want to see the costs that are charged and taken out of their savings on all their annual pension statements – presented in a consistent, clear and simple way, in pounds and pence.

“This research asked the industry’s customers how they want the charges they actually pay to be shown on all the annual pension statements they receive.  Listening to pension savers, the industry’s customers, is critical in delivering what works best for them.

“There’s no current requirement to show the amount that each member pays, in charges, consistently on all trust and contract based annual pension statements.  This research provides conclusive evidence that members expect to see those charges on their pension statements, but also tells us how they want them expressed and presented.”

 

 

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