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Robert Reid: Pension statements need a big shake-up


I was in Boston recently for a meeting with a business associate who is heavily involved in communicating retirement benefits to the US population. His agency is well known for improving the quality of statement design and the output from those statements. In other words, if someone sends a particular type of statement to a group of clients, they have a clear objective in mind.

This is not done in the UK but it should be; by doing it in the US they provide better resources to cover the likely demand. The quality of communication in the UK must improve greatly. 

Several years ago we conducted a review of all personal pension statements. Of the top 20 statements by volume, we found only one provider asked people if they would like to pay in more money. Pension statements at the moment are not delivering, they are merely functional.  

I am at a loss as to why Chancellor George Osborne wants to give people guidance only at retirement. Imagine a typical scenario: someone has not saved enough in their pension plans; they have some broken years in their state pension benefits and ultimately the level of pension they receive is a pittance. 

People need regular input and information to make them realise the severity of their position. This can be done in various ways but the UK market is doing very little thinking outside the box – mainly because all providers and most advisers focus still on remuneration to the exclusion of all else.

This topic came up when I was in the US. It became apparent that although we were separated by the Atlantic, the problems faced by the US public were no different from those faced in the UK and Europe. (France is the obvious exception, continuing to spend tax revenue in years that have yet to arrive.) 

We need to be radical on this and not tinker around the edges. We must start looking at things from the perspective of the client and stop looking from the perspective of remuneration. Questions such as “What can I earn from selling this product?” or “What can I earn from developing this product and allowing advisers to sell it?” are not a good starting point. 

The place to start is: “What can I reasonably charge for delivering a service which allows people to accurately see what life will be like when they are older and at the same time allows them to take action at a time when it will have an impact?”

Guidance must be delivered on a regular basis and it needs to begin when people start work. Those in power must recognise that advice, too, needs to be provided regularly to ensure the client is well informed. And it should be provided in a format that suits the recipient, not the deliverer.

We have an opportunity to make a difference. 

For it to work, we must acknowledge we have failed to date and engage and deliver a message that motivates savers into action.

Robert Reid is managing director at Syndaxi Chartered Financial Planners


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Completely agree Robert – providers, in general, are not engaging or trying to engage with their pension clients in the right way. As an industry we are way off the pace when it comes to customer engagement. Lots of reasons behind this but the industry must make a step change in the way they communicate with their customers going forward – and this engagement must be throughout the customer lifecycle – not just at retirement.

  2. The UK government should take note and keep future pensioners informed as they failed miserably to do for an individual who might retire to somewhere other than the UK.
    The situation that they have allowed to build is now causing real problems for pensioners and the government when a pensioner can move to the USA and get the indexation of his state pension in the same way as he would if still in the UK but should he choose Canada , next door, he will see no increases ever.
    This is not an isolated case as there are 560,000 pensioners who receive no indexation while the other 650,000 pensioners abroad do receive it.
    This is causing anger, confusion and total mistrust of any pension provider and so the government are doing your business no favours and can you blame them ?
    The Pension industry should be telling the government to be fair and just and stop this discrimination which has no place in a democratic society in the 21st century.

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