Scottish Widows warns on pension costs disclosure

Scottish Widows warns on pension costs disclosure

Scottish Widows has criticised elements of the government's proposals to force pension providers to include costs and charges in members' annual statements.

Last month the Department for Work and Pensions published its consultation 'Simpler annual benefit statements for workplace pensions' looking at how it can deliver annual statements for workplace pensions which are shorter, simpler and include cost information.

This would include putting member level charges and transaction costs information in pounds and pence into annual statements.

But Pete Glancy, head of policy at Scottish Widows, said: "Although we understand the motivation of government to disclose product charges, the benefits of disclosing transaction charges are less clear and could be at odds with the desire for simpler and shorter annual statements.

"We recently modernised and simplified annual statements across our entire suite of pension products, and we believe that any changes are likely to be an extensive and relatively costly undertaking for providers, at a time when other mandatory changes are stretching the resources and budgets of the industry."

The government is pushing for shorter statements with simpler, jargon-free, language and key figures presented in a consistent way so savers can understand their pension savings more easily as well as what they have to do to boost their retirement income.

It wants providers to focus the statements around telling savers how much money do they have in their pension pot, how much money they could have when they retire and what they can do to give themselves more money in retirement.

Mr Glancy said: "We are supportive of this initiative as it promotes simplicity and consistency with the ambition of presenting pension information in a format which a typical member of the public would find intuitive and engaging.

"We feel strongly that for the proposed approach to be effective, it needs to apply consistently and comprehensively across all types of defined contribution pension products including trust based, contract based, workplace pensions, personal pensions and self-invested personal pensions.

"Although defined benefit schemes are a very different entity, there should also be attempts to apply the same principles."