Pension annual statements could become a lot shorter and much simpler in the future
If you have a pension, you normally receive one pension statement each year; your annual or yearly pension statement.
Within the statement are details of the value of your pension pot, an estimate of how much income it might provide in retirement, whether your pension has any ‘special features’ (such as a guaranteed annuity rate), and your selected retirement age. Your pension annual statement will also tell you how much if available to transfer your pension pot from its existing provider to a new provider. This is typically the same value as you could get, before tax, if you decided to cash in the entire pension pot.
While pension annual statements are reasonably simple in their current format, the pensions minister, Guy Opperman, has said that they will have to be condensed to a maximum of two pages.The Department of Work and Pensions is expected to draft regulations to mandate for simpler annual statements for defined contribution pension schemes, those used by employers. Such pension schemes provide a retirement income based on the amount of money paid into the pension pot along with tax relief and investment growth on this money.
Yvonne Braun, Director of Long-Term Savings and Protection at the Association of British Insurers, said:
“Simplicity and ease are important when communicating pensions information, which is why pension providers keep innovating for customers, both digitally and in paper communications.
“We look forward to seeing the detailed proposals. It is important that the changes are consistent across regulatory regimes, future-proof, in particular in terms of joining up with pensions dashboards, and that they have a realistic implementation timeline.”
When was the last time you looked through your pension annual statement? Did you understand all of the information the statement provided?
The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website.