Pension charges, forecasts and assumptions poorly understood amid drive to make statements simpler.
The government today opened a consultation to make pension statements simpler, ahead of the introduction of new regulations.
Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “A pension is the biggest pot of money most of us will ever have to our names, so you’d think we’d have more of an idea how much we pay for it; what it is invested in and how much we are likely to get out of it when we retire.
“Unfortunately, a typical pension statement does not always give such crucial information in a digestible format.
“Poor communication around pensions is a big blocker to people engaging, contributing more and ultimately having a healthier pot when they eventually retire.
“We are very pleased to see the steps to simpler pension statements being laid out by the government today.”
The ‘Show Me My Money’ report research carried out by Opinium and Boring Money for interactive investor in 2020, found that 48% of people with life company pensions didn’t know or couldn’t guess what fee they were paying for their pension. Nearly a third (32%) of people don’t know if their pension fund is set to de-risk as they approach retirement.
‘Is 12% the new 8%?’, a report published last week by interactive investor and LCP, the actuarial consultancy, found discrepancies in the official forecasts used for annual growth projections on pension statements, making it hard for people to know what to expect from their eventual pension pot. The report also pointed to the impact of ‘lower for longer’ growth forecasts on pension pot estimates and the prospect that workers will need to raise their contributions to compensate.
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