Statements season could cause mayhem for admins, PASA warns

­Pensions Expert reported in August that the Department for Work and Pensions is looking at options to develop the ‘statements season’ proposed in its recent, simpler annual benefit statements consultation, in a bid to standardise and simplify these documents.

A paper published on Thursday by the industry body’s Benefit Statements Working Group explained that there are two potential approaches to harmonise the publication of these documents.

This could be achieved by introducing a common publication date for all schemes, which means all benefit statements, no matter what their valuation date is, are published at the same time; or by introducing a common valuation date, so all benefit statements are produced at the same specific time.

The paper stated that the second option would be “far more complex to implement than the first”, since introducing a common valuation date would “create a serious capacity crunch, which could impact on the delivery of services in other areas”, alongside with “additional expense, which would ultimately fall upon members in many cases as the costs would be passed on as an administrative expense”.

PASA’s working group also noted that it is difficult “to see what benefit the single valuation date would give to members, which would outweigh these disadvantages”.

“All benefit statements are out of date when they’re received in any event. It’s the receipt of all benefit statements at the same date which creates the statements season, rather than the comparison of benefits across various schemes at the exact same valuation date,” the paper stated.

While preferring a common publication date, since it is likely administrators could manage this across their schemes, the industry body warned that sufficient time to plan and resource such a change will be needed.

“For example, a realistic target date for bringing in the statements season might be 2024 rather than 2023 given the lead-in time required,” it stated.

Annual statements publication dates are currently spread across a 12-month period, allowing third-party administrators to spread workloads during the year.

This means there is “sufficient capacity in the system to complete the necessary checks, liaise with actuaries to obtain the underlying financial information, deal with any queries, undertake printing, and issue the statements to members,” the paper stated.

However, if publication dates fall due at the same time for all schemes, work would need to happen in a very short window, which is very likely to “put significant pressure on administration teams and create resource issues”, the working group warned.

“Schemes and administrators may encounter significant difficulties, additional and unnecessary costs, and adverse implications in the form of delay and/or obstacles to the achievement of other policy objectives if the proposal focuses on achieving a common valuation date for the benefit statements,” it said.

Helen Ball, chair of the PASA working group and a partner at Sackers, noted that the industry body supports the “concept of a statements season and believes the potential benefits are clear”. 

“However, the idea of common publication and valuation dates need careful consideration. A common valuation date would be unnecessarily cumbersome and not deliver much in the way of ultimate benefit,” she argued.

“It’s important for a statements season to work alongside technological enhancements, such as dashboards, to ensure longevity. Access solutions – such as web, post, email – also need careful review,” she added. 

“Ultimately, if all of the information is available online throughout the year, the requirement of a statements season naturally falls away over time and any related legislation should take this into account at the outset.”