Pensions minister Ros Altmann’s decision to launch an awareness campaign on the state pension reforms is certainly a step in the right direction.
The implementation of the policy has been mired in opacity – Corporate Adviser’s requests for detail on how various cohorts will be impacted by the transitional arrangements have been met with Orwellian refusals – and Altmann is right to nudge the DWP away from what one might call a ‘hope nobody notices’ position that hides the plight of the many losers.
So as a first step, a website enabling you to ask for a projection of likely income if you are 10 years from state pension age is welcome.
But as we all know, going on a website and requesting a projection is not the same as receiving one automatically through the post. If an occupational or GPP scheme offered a system where it invited members to apply for a statement, rather than sending one as a matter of course, it would win no prizes for the ‘best member communication strategy’ in this magazine’s awards, not to mention that it would be breaking its regulatory obligations.
The fact is, maybe not everyone needs to know how much they are going to get but most people do. So the idea of not telling people how much they will get, let alone how they will be affected by the change – you can guarantee the statements they request won’t tell the public
what they’d have got under the old system – smacks of the sort of apathy-based financial services marketing techniques so criticised by policymakers, regulators and consumer press.
Add in pension freedoms and, as Aegon’s Steven Cameron pointed out recently, we have a situation where over-55s are withdrawing their pension cash without knowing whether they are on course to receive the full single-tier state pension, let alone beat the means-tested threshold for passport benefits such as housing and council tax benefit. This hardly feels like joined-up thinking and is another example of a situation that arguably justifies a reining-in of pension freedoms so they are available only to those with a certain base secured income. This could be at the level of the new full state pension or slightly higher, to reflect other likely benefits.
But back to state pension statements – which one has been able to get for years. I just can’t see many people bothering to apply for them. I’ve applied for one but I am in the industry; I don’t know anyone outside work who has.
Yet what better way to prick the bubble of complacency of so many Britons over their retirement provision than tell them just how little they will get from the state when they retire? Surely it is time to tell it straight, to everyone, precisely where they stand.