Guy Opperman quizzed on state pension underpayments

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Pensions minister Guy Opperman has revealed that a two-sided sheet will have to be included in annual statements to show savers how much their pot is projected to be when they retire. The changes come amid concerns that many people are still not saving enough for their retirement and are being put off by complex jargon filled statements which do not provide clear information.

The Government is hoping that the changes will bring in a new wave of people saving for their pensions and even encourage people to invest more in their pension pots.

Writing for the Sunday Express, Mr 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.”

Under new regulations to be outlined tomorrow (Monday, May 17), the Government will require pension schemes to issue their members key information highlighting in simple terms the size of the saver’s workplace pension pot and a forecast for their retirement.

A consultation document will outline the exact regulations underpinning the plans tomorrow (May 17), 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.

The statements will be required to show in easy to understandable  terms how much money the individual has in their pension and what has been saved in the statement year;

The statements will also need to show 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.

Mr Opperman said: “Few people think of themselves as investors. But in reality, most of us are.

“Your workplace pension is perhaps the single most important investment you will make in your lifetime. But, for far too long our annual statements have been off-putting, confusing and full of technical jargon.

“Put simply, that inevitably prevents people easily engaging with their retirement planning. Something has to change.

“And with more than 10 million people automatically enrolled into a workplace pension it’s never been more important for information about a pension to be simple.”

He added: “Only by knowing what you have already saved, and your pension forecast, can you properly plan for the retirement you want.

“The new rules I will set out tomorrow (May 17), on which my Department is consulting, will improve on the huge progress automatic enrolment has already made on helping people prepare for their future.

“These changes will mean people can better understand their pension savings and plan for their retirement – steps that are transformative for savers, as well as the UK pension industry.

“They will consign confusing, multiple-page statements to the dustbin, bringing pensions into the 21st century.”

He has also revealed that ministers are looking at introducing a “statement season”, building on the success of things like Pension Awareness Week which puts retirement savings in the limelight and gets people thinking about how their pensions stack up overall.

“It’s time we changed our approach to ensure you can understand what your pension investments will give you at the time they are needed,” he said.

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