New research today from PensionBee finds that 23,500 trees are destroyed each year by paper annual benefit statements, at a time when consumers and policymakers are calling for increased action on ESG.
The UK pensions industry still posts an estimated 200 million pieces of paper each year in the form of annual pension statements and envelopes. An annual statement is typically six pages long, and aims to inform consumers how their pension is performing.
UK savers collectively receive roughly 40 million annual statements. This is equivalent to approximately 23,500 trees worth of paper.
Paper intensive statements continue to be used by the pensions industry despite Government commitment to planting millions of new trees to achieve UK net zero carbon emissions by 2050.
Pension trustees are now being asked to focus on new legislation around ESG, whilst other parts of their businesses simultaneously damage the environment by posting out millions of pieces of paper each year. PensionBee estimates that the paper, printing and postage costs involved in sending statements costs the industry over £21.5 million annually.
Very few pension providers offer digital statements as standard and the industry has previously described the process of sending email statements as ‘burdensome’.
With banks and utility companies already axing paper statements, the pensions industry is lagging behind in adopting digital statements. PensionBee found that consumers deem pension paperwork to be not only confusing and hard to engage with, but also a hassle to store for a lifetime.
The issue has not gone unnoticed by the government, who in 2019 launched a consultation on ‘Simpler Annual Benefit Statements’. Debate has focused on simplification and standardisation but PensionBee research shows that the more pressing issue is in fact paper.
Clare Reilly , head of Corporate at Pension Bee told the Plowman
The futility of paper statements is clear. They destroy the environment, cost the industry millions to send, prevent meaningful consumer engagement and mostly sit unopened for decades in drawers. Digital statements are better for the planet and better for savers. Pensions need to go digital-by-default or face becoming irrelevant in the age of Open Finance.”
As Pensions Minister Guy Opperman seeks legislation to require trustees to incorporate ESG into their investment principles, this research shows that it’s clearly time for all annual statements go digital as well.
And so says AgeWage
At NOW: Pensions we’ve gone 100% online statements with paper versions only for our disabled customers that can’t read things on screen. Adrian
There is clearly scope for a substantial reduction in such paper usage. However, I do feel it would be helpful if some people in the pensions industry spent a bit more time with those who are older, less educated and less able than they are. There are a lot of people who simply don’t do online and many others who only do it in extremis.
We have a developing problem in that some pension statements are available online by default, or perhaps just available online. Many of the people in such schemes have long since lost their online credentials. They probably never did anything with them in the first place. These people have now effectively been shut out from their pensions.
Switching off paper statements may be wonderful for the trees, but it it further reduces pensions engagement with the less able members of society.
I think paper still has a role to play both for the reasons you suggest but also to nudge people to contact the scheme to say they’ve moved. As in “I didn’t get my statement” “Oh? we sent it to…” “Ah! I left there 7 months ago”.
However I agree with one provider who said “We don’t send out paper statements for fear of personal info not being delivered [due to an out of date address]”. They suggested writing a postcard to all members saying “Your statement is now available online” (they would send a paper one in extremis too).
Ros Altmann’s idea of a birthday card is a brilliant suggestion that would help solve the issues: keeping in touch with the non-techy; nudging people to look online; avoiding the risk of data exposure; something that could become expected and prompt a notification of an address change.
Thanks Richard, we need to do better about getting people’s email addresses. I know of at least one large insurer which is targeting improvements in that area. Paper on request seems the way to go.
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