The U.K. government published guidance for its upcoming regulations that will require trustees and executives of defined contribution plans to produce simpler benefits statements in order to enable plan participants to better understand how their savings are invested.
The new statement rules will apply starting Oct. 1, 2022, for defined contribution and money purchase plans. Executives will be required to present the information in a clear way so that plan participants can understand what they saved in each statement year, how much income they are projected to retire on and how they can increase their retirement income.
In October 2020, the government published an intention to reduce the statement to a simpler two-page format and in May 2021 it consulted on the proposed changes. In a response to its consultation Tuesday, the government welcomed the support for its proposals.
"Annual statements are long-established but should not simply provide information which is indigestible to the saver and which results in them being unread, or without the saver being able to understand their content. They should guide a saver through a straightforward narrative that enables them to see how much money they have in their pension plan and what they have saved in that year; how much money they could have when they retire; and prompt them to think about what they could do to give themselves more money when they retire," Guy Opperman, U.K. minister for pensions and financial inclusion, said in a response to the consultation.
As part of the simpler statement, the government also wants trustees to show plan participants how saving more into their plan or changing retirement age may generate an increased income at retirement.
The improved statements should also show to participants where they can get information on pooled funds they are invested in and their plan's latest climate change report that is aligned with standards of the Task Force on Climate-related Financial Disclosures.
