Encouraging more people to engage with their pensions is something everybody in the industry should agree with and we very much welcome initiatives which will help improve this.
It’s been known for some time that a pension statement season – when all providers would be compelled to send out statements during the same narrow window – was being discussed within the Department of Work and Pensions. Now, following the Pensions Minister’s recent address during the Pensions and Lifetime Savings Association conference, we know that this is an idea which could become a reality.
It’s widely known that many people don’t usually read their pension statements. Schemes send them and too often they languish unread. There’s little point in the simplified statements, which will be introduced in a year’s time, especially if they get sent out and are unread like previous communications. Policymakers are of the belief that a pension statement season will prompt more people to engage with their pensions but there are genuine concerns within the industry that any such policy might lead to unintended consequences.
Questions to be answered
Those of us charged with delivering such a significant change have questions about how it would really work and what the impacts of a statement season would be on savers.
As the biggest independent master trust in the UK, The People’s Pension has 5.4 million members. If we were to send out statements to all our members during a month, that would be 180,000 statements posted a day. It costs roughly £1 per paper statement, a figure that doesn’t vary much between providers. So, if the government mandates paper statements it could cause additional costs, which may be passed to pension savers through charges.
Then there’s the likely impact on customer service teams, rather like the one I oversee. Currently we phase sending out statements due to the increase in contact from customers after they’ve received them as, often, the notification of a statement acts as a trigger to transact with us.
We expect that a statement season will concentrate all the customer contacts into a short window. This could lead to a saver’s first engagement with their pension provider being a negative one as they may have to wait for an unacceptable period or be unable to get through.
There’s often an assumption that you can just scale up and scale down these operations to meet demand, but sadly that’s not how it works. We’re administering people’s life savings and you need to be able to trust the people you have doing that. Trust means training, knowledge, skills and expertise and that takes time. There isn’t a pool of people out there you can just draw on at short notice to fill gaps in your operation – especially if every other pension provider has the same problem.
Potential for saver frustration
It’s likely that the main impact of a statement season will be saver frustration. There also won’t be a major lift in engagement when measured over the course of a year – at least not for some time. Concentrating engagement into a short period will overload contact centres and degrade the experience people have talking to their pension provider.
People contact us for a variety of reasons; some to see how their savings are doing, while others ring up because they are dealing with the death of a family member or because they need quick access to their savings. It’s people like this we’re especially worried about as an overloaded call centre could prevent them from getting through when they need support the most.
We understand the intention behind this proposal, but we remain concerned that the government’s plan to improve engagement will result in frustration rather than meaningful engagement.