PASA looks to avoid statements season ‘capacity crunch’

Pensions Expert reported in October that the government had decided to delay the introduction of so-called “simpler statements” to October 2022, as the industry baulked at the workload they would require.

Prior to that, PASA warned in September that the statements season itself could cause “significant difficulties, additional and unnecessary costs, and adverse implications” if the wrong implementation route was chosen. 

The idea would see the simpler annual statements published and sent to members in a specified window, which pensions minister Guy Opperman said he hoped would lead to conversations about pensions in the pub.

But PASA warned that introducing a common valuation date for schemes so that all benefit statements were produced at the same time, which was one of the options being considered by the government, would risk a “serious capacity crunch”.

In its supplemental paper, the industry body made a number of additional recommendations designed to smooth the implementation of the statements season.

The first of these is that the statements season should encompass a period lasting three months, which would be “more effective than a shorter window” and “ensure a better experience and allow the industry to provide savers with the support they need”. 

Though noting that there is no “perfect time” in which to place a statements season, it recommended that the three months last from September to November, thereby avoiding the start of the calendar year, the summer holidays and the Christmas period, all of which are busy enough already.

It noted that the “strongest feelings” evoked by the statements season proposals concerned the format of the statements themselves — specifically, whether they would be sent on paper or digitally.

PASA recommended that the focus be placed on digital statements, which arguably runs against the approach favoured by Opperman, who told a Work and Pensions Committee hearing in November: “Clearly, online versions are very important — dashboards will be crucial.

“But are you seriously saying that your elderly mum or dad, or my elderly mum or dad, and the vast cohort of pensioners out there who are not computer literate let alone unable to understand a savings app or a banking app and a pensions app going forward are [not going] to benefit from this?

“We will require written pension statements for some considerable period of time to come. That is absolutely clear.”

PASA, though, argued that requiring the issuance of paper-based statements would run contrary to government policy around encouraging digital communications, preparing dashboards data, and minimising carbon footprints.

It also argued that statements season information and the definitions underpinning it should align with the pensions dashboards, not least to avoid “saver confusion”. It also disagreed with proposals that would require trustees to change their current valuation dates, as these would be unnecessary, costly and disruptive.

Finally, it recommended that any implementation date chosen by the government must account for “other time-critical pension projects”, with PASA preferring autumn 2023 as it would allow administrators to prepare and test their systems.

“An early launch of a statements season could compromise the ability of administrators to effectively manage other recent and upcoming policy changes during 2022, including new rules on transfers out, production of simpler annual benefit statements, dashboards compliance and the upcoming nudge to guidance,” it said. 

“If these projects aren’t managed well, there could be a negative impact on savers’ trust and willingness to engage with pensions.”