Ruston Smith and Quietroom
We need improved annual statements from our workplace pensions because….
- Many annual statements are too long, complicated and include jargon
- As people have savings with many providers, they get different statements at different times of the year, with different words (and jargon), different numbers based on different assumptions – tough for savers
So Ruston Smith and Quietroom set out to develop a simple one page statement based on the information that they’ve learnt matters most to members – tested as they went along getting feedback from savers, employers and providers
They based their work on the sentiment of the relevant regulations – and then checked it against the DWP, FCA and FRC requirements
They were close to a statement that would be compliant – so they continued to look at how we could make it fully compliant – and they did.
Inevitably, as they aimed to make it compliant, the statement got less saver friendly-but – but they produced it anyway. This is what it currently looks like.
A one page (two sided) annual statement with no jargon – that is ‘fully compliant’.
The team acknowledges the bottom half of the second page could be much less wordy but that’s the bit that was used to include the detail to meet a ‘paper based’ compliant statement
The one pager has been developed for those (particularly small) companies who may not have ‘opted out’ of providing paper statements – where ‘all’ requirements must be included
- Here’s a summary note of the guiding principles they used
- They want the statement to be improved – made shorter and simpler
- They have the opportunity to clearly signpost the more technical less engaging stuff (eg assumptions) to a website (where the ‘opt out’ of paper statements has been communicated to members – ie the legal requirement)
Their big message
“No change in regulation needed”
So, what’s next?
- The one page paper Annual Statement appears in the AE report today
- nand Quietroom will consult on it and do further user testing (of members) – to get to a final version
- They’ll also develop, early next year, a really simple (shorter) statement that works for members – which can be issued electronically with other stuff nicely presented elsewhere on a website (with clear signposting)
- They already have support, in principle, from a number of providers, union and employers to adopt the Annual Statement using the same words, same numbers using the same assumptions, and to send it out at the same time of the year (statement season – May to July)
- They’re working on an approach to get a standard set of assumptions (for expected returns etc) from a source that providers would be happy with
- The finished product will be a white labelled Annual Statement – allowing providers to use it, but also personalise it to their own type of branding
What will this mean for members – if we can get everyone behind it?
- A simple annual statement that they can understand – clear, short and simple – and where all statements will be ‘consistent’
- A statement that doesn’t include jargon – with only the information that matters to them
- The aim is that all statements they receive will include the same words and numbers using the same assumptions – so they can make sense of them all
- A greater ability to encourage personal ownership and engagement
What about Pensions Dashboards?
- Dashboards are an opportunity for the future – to hold members’ pension information from all their providers in one place
- The work Ruston and Quietroom are now doing could make a valuable contribution to the dashboard – as they develop the consistency of numbers and language that could be used within it
- The requirement to produce an Annual Statement when the dashboard is in place, is likely to continue – so this will still needed
Call to Action
I hope that those reading this can support this initiative and encourage the industry to get behind it. Ruston and Quietroom would also appreciate your thoughts on any improvements you think could be made. Please mail them to email@example.com and I’ll copy you in on correspondence
I find myself drawn to the numbers.
The member has put in £14,100. The employer has put in £28,200. Tax relief on top would add another £3,525, a total contributed of £45,825.
If that’s only worth £46,300, the underlying investment plan is rubbish. And I don’t just mean with costs eating up over 63% of the most recent annual returns ….
It’s not just the price of annuities which determines income in retirement, but the net investment returns on top of the contributions.
I also think the example should be based on average or below average earnings, not someone earning £40k.
And don’t start me on what a Scottish income tax starting at 19% could do to the figures for the minirity of people (Scots domiciled) who’ll be affected by Scottish devolved taxes ….