20 December 2019

Royal London rejects standardised approach to benefit statements in favour of a principles-based approach

5 min read

 
Helen Morrissey, Personal Finance Specialist
Helen Morrissey

Corporate PR Specialist – Long Term Savings

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Royal London has rejected the proposal for a standardised shorter annual benefit statement in favour of a more principles based approach.

Responding to a government consultation on the issue the mutual insurer said that while it supported the aim to improve customer communications, adopting a standardised, shortened format would lead to important information being left out.

Providing feedback on a sample statement included in the consultation the insurer said information on costs and charges needed to be included as well as the percentage return on the investments. The shorter format also omits key calls to action such as updating beneficiaries and that more needed to be done to signpost members to where they can go for more information.

The shortened format would also mean important information around the Royal London ProfitShare scheme, whereby a share of the company’s profits are added to customer’s pensions  would not be included.

The cost of moving to a standardised format was also highlighted with the insurer estimating the costs could run to £3.6m with further costs for legacy customers. In 2017 Royal London comprehensively updated its annual benefit statements in line with customer feedback. The move has been greeted very positively with 95% of customers saying they found the information in the statement easy to understand.

Given that the Pensions Dashboard will soon become the main place people go to see all their pension information it argues against incurring huge costs re-designing paper statements that are already being seen as effective.

It added that adopting an industry-wide approach would mean that any necessary updates would be done by a “slow ‘by committee’ process and that is unlikely to be one that will include individual changes that will be important to our members.”

Commenting on the consultation, Isobel Langton, CEO of Royal London Intermediary, said:

“While we certainly support the aim to improve how we communicate with customers we feel that taking an industry-wide standardised approach is not the way to go. Shoehorning the statement into two pages means important information on costs, charges and investment growth could be omitted. We also want the flexibility to include important messages such as the value of taking financial advice, our ProfitShare scheme and where to go to get more information. Adopting a more principles-based approach will enable us to do this.”

-ENDS-

Notes to editors

The consultation closes at 11.45pm on 20 December. https://www.gov.uk/government/consultations/simpler-annual-benefit-statements-for-workplace-pensions

A copy of Royal London’s response to the consultation is available on request.

For further information please contact:

Helen Morrissey, Corporate PR Specialist – Long Term Savings

About Royal London

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.

At Royal London, we’re proud to champion the value of impartial advice. We believe it plays a crucial role in connecting people with the products that are right for them – and is key to delivering better outcomes and experiences for our customers. At the same time, it helps to build trust in our products and services.

Royal London works alongside advisers not in competition with them. That’s why we’ve made some key commitments to the intermediary market. You’ll find more detail on our commitment to advisers at http://adviser.royallondon.com/campaigns/our-commitments/