The government has delayed the introduction of simpler annual benefits statements until October 2022, following industry concerns about the amount of work required to implement them.
In its response to the simpler statements consultation, published yesterday (October 19), the Department for Work and Pensions noted that, though broadly supportive of the proposals, the industry was concerned about the ability of many schemes to implement the policy by the original date of April 2022.
“There was, however, no consensus about an alternative coming into force date with a number of options presented, including October 2022 and April 2023 with some suggesting the coming into force date be governed by the scheme year end rather than the issue date,” the DWP said.
It noted some providers had already adopted the simpler annual benefit statement template on a voluntary basis since 2018.
It added: “The government is mindful, however, of the concerns expressed about the need to ensure the trustees and managers of all schemes in scope have sufficient time to adopt the requirements of the new regulatory approach in order to ensure the accuracy and quality of statements.
“Therefore, the coming into force date of the regulations has been amended to October 1 2022.”
Separately, the government noted a number of responses to the consultation arguing the new statements should be required of all defined contribution schemes.
The DWP plans for them to apply to only auto-enrolment schemes, but in the consultation response it said its long-term plan was to “improve consistency across all categories of schemes through short, simple, statements”.
It pledged to “consider the lessons learnt” by the first roll-out, to be published in a review by October 2027, and look at “their applicability to other kinds of scheme”.
In his foreword to the consultation response, pensions minister Guy Opperman wrote: “I believe that short, simple, statements will usher in a new standard for how schemes communicate with their members – greatly improving people’s understanding and engagement with their pensions. That is why this government is driving forward consumer focused simpler annual pension benefit statements.
“Annual statements are long-established but should not simply provide information which is indigestible to the saver and which results in them being unread, or without the saver being able to understand their content.
“They should guide a saver through a straightforward narrative that enables them to see how much money they have in their pension plan and what they have saved in that year; how much money they could have when they retire; and prompt them to think about what they could do to give themselves more money when they retire.
“They are a tool that can start an engagement journey through the variety of other tools or sources of information that exist, or which can provide simple, straightforward, reassurance that things are on track.”
Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert