Introducing the universal retirement account statement

by Vincent Franklin on

Ruston Smith, Group Director of Pensions at Tesco, is one of the three independent advisors on the Government’s auto-enrolment review. He asked us to create a model Annual Statement for Defined Contribution pension schemes. One that any scheme could use.

With support from Eversheds Sutherland, the PLSA, the ABI, and a number of providers, we’ve developed this prototype. It’s been knocked around by several interested parties, to get it this far. In an ideal world, we’d have used fewer words. But the lawyers say this version is compliant. Which is nice. So you nothing else needs to go in the envelope. Just two sides of A4.

Now it’s going into testing. And we’ve already heard that a couple of schemes are planning to start using it very soon. See what you think.

[We updated this blog post on 7 June 2018]

Download this statement as a PDF

What we wanted to achieve with this Retirement Account Statement

1 – Make it work within the existing legislation

The project encouraged us to think about what would work best for members, even if this meant challenging legislation. While we haven’t taken this version through sign-off, we decided not to push against legislation. We didn’t want the project to falter just because changing legislation proved too difficult.

2 – Make it work for the lowest-tech company

There are lots of moves afoot to produce videos, electronic versions of statements etc. These are all really exciting, but some schemes may struggle to afford or adopt them. We wanted to produce something that every scheme could use. So we wrote a paper statement. This had the added benefit of making it easy for people with multiple schemes to compare what they have in their various pots. It can, of course, be adapted for other media.

3 – Get it down to one piece of paper

Members complain about the pages and pages of material they get in their statements. They find it difficult to find what matters. And it’s intimidating. As a result, statements are often just filed away unread.

4 – Use a transparent structure

People need to know where they are now, where they’re going and how to change the destination. We supported this by using a three-step structure and colour-coding. Providers and sponsors can then adapt this to work with their own brand colours.

5 – Show people what they could do next

Data without direction isn’t helpful. We wanted people to be able to use the information to change their behaviour.

6 – Remove references to a ‘pension’

We wanted to talk instead about having a pot of money to use any way you want. We also stripped out words like ‘benefits’ which are hangovers from DB schemes.

7 – Help people see what value they’re getting

Rather than just focus on how figures have changed over the year, we wanted to help members see how much they have in their pot and how little income they’ve had to give up in order to get it. This way, they get a much better idea of the great value they’re getting from their pension, even in years when investments may have performed badly.

8 – Make all the messages clear and positive

As well as stripping out jargon, we shortened sentences, put in verbs and used lots of ‘you’ and ‘yours’.

9 – Give clear directions

Rather than trying to pack everything into the Statement, we’ll direct people to places where they can find out more and take action. Rather than vague signposts to a website, these are specific references to individual sections, even pages.

10 – Produce something that can adapt

Sponsors and providers will want to add material around the Statement. Keeping it down to two sides and using a simple, distinctive design, will help members find these pages from within a longer document. They can then compare them with similar pages from other documents from other schemes.

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