Savers will have a much clearer picture of their pension pots from next year, thanks to government plans to introduce simpler annual statements.
Under new regulations to be outlined this week, the government will require pension schemes to issue their members two-page documents highlighting in simple terms key information including the size of the saver’s workplace pension pot and a forecast for their retirement.
A consultation will outline the exact regulations underpinning the plans today (17 May 2021), with the proposed changes set to come into effect in April 2022.
The move reiterates the government’s commitment to encouraging savers to build up their pension pots by ensuring they can easily see vital information about their finances in a simple format.
The initial focus will be on savings from automatic enrolment, with a view to later improving simplicity across all schemes.
Minister for Pensions Guy Opperman said:
It’s clear the status quo is not working, with savers left puzzled by the complex, sprawling, jargon-filled statements commonly used by the pensions industry.
Simpler statements will set a new standard for how pension companies communicate with their members.
With more people saving for their retirement than ever before thanks to the success of Automatic Enrolment, it’s vital they can understand what’s going on with their hard earned money and actively plan for their future.
The statements will be required to show in easy to understand terms:
- How much money the individual has in their pension and what has been saved in the statement year;
- How much money they could have when they retire; and what they could do to give themselves more money at retirement.
These changes build on plans for the pension dashboard, an innovation that will allow savers’ pension information, including their State Pension to be accessed on digital devices at any time they choose.