Industry experts have called for the standardisation of pension scheme information, in the style of the uniform pension overviews found in the Netherlands.
Responding to questions at the launch on Tuesday of mastertrust Now Pensions’ report, 'Pensions 2022', Michelle Cracknell, chief executive of The Pensions Advisory Service, told delegates standardisation of information needed increased support from the industry and government.
There has to become a head of steam with regards to this idea of one common set of pension information
Michelle Cracknell, TPAS
A UPO is a standardised annual pension statement format that must be used by all Dutch pension funds and insurers.
The statement shows the individual’s accrued pension, attainable pension at retirement, and projected pensions for the individual and their dependants based on a number of different scenarios.
Standardised information is used to ensure consistency of data for both members and schemes, provide a guide for pot transfers, calculate transfer values and simplify authentication of pension values.
Cracknell said: "There has to become a head of steam with regards to this idea of one common set of pension information."
Asked about the potential for UPOs to simplify pensions guidance, she said any system of standardised information was unlikely to be implemented until after the Budget reforms have come into effect.
“There’s an awful lot going on within the providers [because of] changes to the system," she said. "So I don’t think it’s going to be ready then, but that doesn’t matter. It needs to be ready at some point in time... We’re not sure exactly whether it’s going to come out because the government’s going to push the industry to go, or the industry will do it off their own back.”
Michael Johnson, research fellow at think-tank Centre for Policy Studies, said change would be slow to come, adding: “The industry hates standardisation and will drag its feet on it." He argued an increase in simplification and transparency may be seen as bad for business.
Johnson previously proposed UPOs in a CPS paper entitled 'Aggregation is the key'. The paper stated: “The Dutch system allows changes of information to be rapidly shared with the pension providers, because Dutch residents are obliged swiftly to provide such information to regional authorities.”
“The British have always resisted this. [HM Revenue & Customs], for example, does not help schemes by sharing information (aided and abetted by the data protection act). Given the prevalence of [National Insurance] numbers, it should not be difficult for HMRC to exchange information with a small number of accredited aggregators.”
However, Joanne Segars, chief executive of the National Association of Pension Funds, noted on the same panel that the complexity of the UK pensions industry compared with that in the Netherlands makes implementation more difficult.
“There are fewer schemes in the Netherlands to have that standardisation across,” said Segars. “That’s a lot of moving parts to [fit] into one standardised process, so I feel its a kind of structural issue.”
