Pension provider Royal London has revamped the information it sends to those approaching retirement - known as 'wake-up packs' - and will start sending these to customers five years prior to their retirement date.
Under current rules providers only need to send customers a wake-up pack six months before their chosen retirement date.
However, in a bid to help customers start thinking about their retirement finances earlier than they currently are, Royal London will be sending these documents to savers every year until they reach their retirement date, besides the mandatory six months’ pack.
Jamie Clark, pensions expert at Royal London, said that these documents will also be sent to the clients’ financial advisers, in an attempt to prompt a conversation about the individual’s retirement options.
He said: “It’s not just about extending the length of the conversation. We also want our customers to really engage with their retirement planning, while encouraging them to seek impartial financial advice.
“That’s why we’ve worked with real customers to create a new suite of retirement communications. Using simple steps, clear visuals and plain English, we think our new material challenges the style of communication customers might have come to expect from their pension provider.”
The wake-up packs will be different according to the customer’s countdown to retirement, with tailored information to each period – five to three years to retirement, two to one year, and six months.
Mr Clark added: “We believe this new approach will not only improve customer engagement – but will also help them make more informed decisions when the time comes.”
Providers' wake-up packs have been criticised by several industry specialists, such Baroness Ros Altmann, former pensions minister.
She has described these documents as “forty-pages guaranteed to send you to sleep, which are sent out six months before some supposed retirement age when most people are still going to be working”.
She said: “The message they send to people, which was deliberate before, is that your pension is over. You now need to decide what you are going to do.
“That is completely the wrong message at a time when people are still working and are likely to continue.”
The Financial Conduct Authority (FCA) is currently reviewing the effectiveness of the retirement wake-up packs, and possible changes will be announced in the retirement outcomes review final report, to be published this year.
William Burrows, retirement director at Better Retirement and who has seen Royal London’s new wake-up packs, argued that “the more nudges people have, the better”.
He said: “Five years prior to retirement is the point in time where people can start to make a real difference. If the objective is to get as much income as you can at retirement, there's no point in leaving it to the last minute, you can really make a difference in the run-up to retirement and the most important thing that people can do is to look out at their investment strategy.”