Providers have backed Government proposals designed to radically simplify pensions disclosure requirements but some have called for bolder reform.
Last week, the Department for Work and Pensions issued a consultation setting out plans reform the disclosure rules which occupational, personal and stakeholder schemes must follow.
The proposals, which are due to be implemented in October this year, include plugging gaps between FSA and DWP disclosure rules, simplifying the way DWP regulations are written, forcing personal pension schemes and defined-contribution schemes to tell members if their funds are being invested on a “lifestyling” basis, and making it easier for the pensions industry to communicate with customers electronically.
Aviva corporate benefits head of policy John Lawson says the provider will press the Government to go further and reduce pension disclosure requirements to a one-page document.
He says: “The information we have to send to people at the moment is long winded, difficult to understand and spuriously accurate.
“This is a step in the right direction but I would love to boil all of the information we send to people to a one-page document saying this is our rough guess of what you will get at retirement.
“We have still got time to persuade DWP to be even more bold than this.”
Government officials are also looking at the possibility of replacing prescriptive disclosure requirements with an overarching principle outlining how information should be presented to customers.
The DWP suggests the principle could be that that “members should be given sufficient information that allows them to understand the benefits to which they will be entitled and any other relevant information that will enable each member to make decisions in his or her best interests”.
Lawson says: “I do not think we need prescriptive, detailed regulations to govern what we send to customers any more. The industry is much more responsible than it used to be and I think we are moving to a place where a principles-based approach could work well.”
Evolve Financial Planning director Jason Witcombe says: “I think if we could get to a position where there is good, simple disclosure on a single page that would be a good thing.
“But the danger with moving to a principles-based regime is that providers will live in fear of the Government coming back in five years time and saying they have been misleading customers.”
Aegon regulatory strategy director Steven Cameron welcomes the clarification from DWP that websites and email can be used to communicate information to customers.
He says: “We are particularly pleased to see the Government enabling a greater move to digital delivery of information and allowing providers to focus on core information with signposting to websites for more detailed information for those who want it. This must be the future.
“Reminding people they are about to enter lifestyling is also sensible. This will remove one of the criticisms of lifestyling as it empowers individuals to override their investments if what was set up originally no longer suits their circumstances.”