The 2017 statement with charges disclosed

I’m no oracle and I don’t break embargoes, but I’m “all in” that today the Government will announce at last that the simple annual statement will supersede the 18 page monsters of the past and we will have our “paper dashboard”.

The “paper dashboard” is not my phrase, but Guy Opperman’s and I’m taking him at his word that what I can see on my simple annual statement, I will be able to see online -eventually.

So what will the statement say?

Although the simpler statement started simple (see the one above), it became more complicated when the line about  the cost of managing and investing your money got lost and replaced by a fudge

After charges the value of your investment would have gone up by…

The 2019 version with charges taken out

Jonathan Stapleton clearly knows something (if only from the Daily Telegraph)

At last – the end of the 18 page annual statement – DWP to mandate use of simpler annual statements for DC schemes: https://t.co/Nb0kRBvVUL @romisavova @YvonneBraun4 @darren_philp pic.twitter.com/1uQ1jpXnXG

— Jonathan Stapleton (@jonstapleton) October 17, 2020

Of more interest was a follow up tweet from Ruston Smith, following my query about the inclusion of costs….

Expect to see annual costs included on the mandatory statement alongside a link to responsible investment. Consistent and simple two pages but with the ability to get and see more if a member wishes. https://t.co/pNypHULKG2

— Ruston Smith (@RustonSmith1) October 18, 2020

I hope Ruston’s right, though what Guy Opperman told the Telegraph does not include the disclosure of what your pension cost you last year.

(Simpler statements) will have to include three key pieces of information: how much money is in your pension pot, how much money this could grow to by the time you retire, and ways to boost the amount you have to live on in retirement.

Update

Since the publication of this blog , the consultation response has been published and the Government have announced that it will not mandate the disclosure of experienced costs and charges. This is (in my opinion) a shame and an opportunity lost.

More of the same old?

This sounds like the old agenda which can be paraphrased as

1. Look how well we’ve done for you
2. Look at how this money is going to grow
3. Give us more of your cash

To which Middle Britain yawns and throws the statement in the bin along with the junk.

People want meaningful information that makes them think. If I find I have paid  £2,000 to my pension provider to have them look after my £100,000, I might ask what I’m getting for my £2,000. I might also ask whether I could get much the same for half as much or even a quarter that amount. Value for Money, as Ruston points out, is hard to assess if you don’t know the money.

Ruston is also keen to point out that the disclosure of how much we pay must be as simple as the statement itself

I agree. How does that really help members? Simpler costs and charges itemising the actual members’ costs for investment, buying / selling and admin in £ and p makes much more sense. Nice development to the Simpler Annual Statement @henryhtapper @ThePLSA @PMIPensions https://t.co/wEmd9TliR3

— Ruston Smith (@RustonSmith1) July 9, 2019

When do I get my simpler statement?

Many providers have already moved towards whatever the Government has in mind.

The Telegraph is quite explicit

The DWP will draft regulations to mandate this simplified statement for defined contribution schemes used by employers on behalf of their staff.

This sounds like more talk of a Pension Bill (II) as there’s no way we’re seeing further amendments to the current Pension Schemes Bill. But this does mean that we will have to wait at least a year to see our paper dashboard.

Why the charge issue matters

The Pensions Minister has now made an explicit link between the statement and the dashboard. He first used the “paper dashboard” descriptor only last week and if we are to believe that what goes on the statement – we will see on our digital disclosures, we can hope for a more comprehensive dashboard, in time – than we might have supposed.

But the key to all of this is time and it looks like certain providers are putting up an effective lobby suggesting that if they told their public what they were paying to have their money managed, they would stop saving.

The argument, which is at the heart of all consumer campaigning from Mick McAteer, Chris Sier, Pension Bee, Smart Pensions, Ruston Smith, Andy Agethangelou and Martin Lewis is that people do not respond to being misled with incomplete information. I said as much in our  response to the DWP’s questions.

Sunshine is the best disinfectant, there is a crack in everything – that’s how the light gets in.

Today could be one of those days , when pensions moves on. For this to happen, the itemized pension statement will need to “share the bill” with us. No disclosure of costs and charges – no progress towards the transparency we need to restore the “trust deficit” in pensions.

By the time you read this…

You may already know what the simpler annual statement will contain as you read this. You may be sighing with relief or recoiling with horror (depending on what camp you sit in).

For Ruston and all the people who have worked for years to get the statement not just simpler, but meaningful, the DWP’s consultation response to its questions about the simpler statements is a Rubicon

It could be what Martin Lewis called last week “a line in the sand” or it could be no more than a marketing gimmick , using better words to say the same old thing. Since 2017 I have supported the simpler statement on this blog, but it was the statement that said something “clear vivid and real”. Let’s hope we get the proper statement we were originally promised (see top) and not the watered down version we got in 2019.

Before

After