Simpler annual benefit statements from October 2022

The Government has published regulations, guidance and a consultation response on requiring automatic enrolment pension schemes that provide only money purchase benefits to issue simple annual benefit statements on one double-sided sheet of A4 (or an electronic equivalent when printed) from 1 October 2022. The regulations explicitly require that trustees/managers have regard to the guidance published by DWP concerning the content and layout.

In response to concerns about the speed of implementation of the new requirements, the DWP has provided a slight softening of the timescale, having originally proposed a 6 April 2022 implementation date in its May 2021 consultation. Otherwise, it cites widespread support for its ambition of simpler, shorter and more consistent annual statements.

The DWP has retained the proposed order and content for the five sections of the annual statements in the updated guidance, namely:

• Member and pension scheme details.
• How much money the member has already in their pension plan – this should include a line informing the member that further details on charges and transaction costs are available and can be accessed via a clear link. Although the DWP encourages trustees/managers to provide more information on these charges/costs where possible, the ‘money in’ and ‘money out’ columns (to give a pounds and pence demonstration of the impact of charges) in its template remain optional.
• How much money they could have when they retire – this would appear to include the full range of information required for statutory money purchase illustrations which may pose challenges to the brief format.
• What a member could do to give themselves more income in retirement.
• How to find out more about the pension plan and how they can use their money.

Schemes are permitted to use their own branding and colours but cannot take the statement over the two-side maximum length. The guidance also contains information on layering (the provision of supplementary information which can be provided with the statement but always after it), signposting, on-line and digital formats and alternative formats and accessibility considerations for disabled members. These areas will all need consideration by trustees and their administrators well ahead of the usual timescales.

The DWP will carry out and publish a review of the effectiveness of the statements before 1 October 2027 and, along with lessons learnt, will consider extending the range of schemes that are required to issue them. Measures to bring in a ‘statement season’ remain on the ministerial to-do list.