The result of the judicial review into the rise of the state pension age could have widespread implications for the pension industry, Quilter has warned.
According to Ian Browne, a pensions expert at the wealth manager, if the High Court decides that the government didn’t communicate clearly its decision to increase the age at which people can retire, that will set a precedent.
He told FTAdviser: “The onus is not just announcing a change, it is making sure people clearly understand that change. This could have implications on pension providers and the financial services industry in general.”
According to Mr Browne, the issue in hand “basically boils down to what counts as proper disclosure of information”.
He said: “Communication regarding pensions is a painful task as engagement is limited. For those that keep the reams of the paper they are given, they often are put at the bottom of a ‘life admin pile,’ and more commonly people quickly glance at them only to throw them away.”
Mr Browne stated that the pension industry has been pushed to disclose more and more over the last few years.
He said: “The objective is of course right, transparency is vital. However, with documents like annual statements running into many pages we do have to challenge ourselves about quality over quantity.”
The question providers will have to face, if the judicial review is successful, is how they can ensure people comprehend and engage with this information, he added.
Plans to increase the state pension age were first announced in the Pension Act 1995 but these changes were accelerated as part of the Pension Act 2011.
Campaign groups The Women Against State Pension Inequality and Backto60 have claimed these changes were implemented unfairly, with little or no personal notice.
The groups, which are calling for compensation for those affected, have also claimed that changes were implemented faster than promised with the 2011 Pension Act and left women with no time to make alternative plans, leading to devastating consequences.
Earlier this month, Backto60 took the government to the High Court for a judicial review into the way the retirement age was raised.
Two claimants - Julie Delve, 61, and Karen Glynn, 62 - argued that raising their pension age "unlawfully discriminated against them on the grounds of age, sex, and age and sex combined". A judgement has been reserved.
Romi Savova, chief executive of consolidator PensionBee, noted that most consumers saw pensions as complicated and boring, so the onus was on providers to overcome these perception barriers.
She said: “Unfortunately, much of the pensions industry maintains a customer experience better suited to the 19th century.
“For example, most traditional providers only communicate via post, sending customers reams and reams of paperwork that often never gets read. It’s unreasonable for pension providers to expect customers to meaningfully engage in such an outdated and complicated way.”
On the other hand, customers must take responsibility for their finances and positively engage whenever it is reasonable for them to do so, she stressed.
She added: “While a balance must be struck, a simple test of ‘would my mum receive and understand this communication?’ can help providers rise to the challenge.”
maria.espadinha@ft.com
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