UK – Consultancy firm Towers Perrin says cooperation between all parties is needed in order to avoid further accusations of pension mis-selling, saying the “halcyon days” of basic pension communications are now over.
“Employers trustees, pension providers, consultants, legislators and regulators all need to work together more effectively to ensure that we do not get accused by employees of pension mis-selling in future, whatever the type of pension plan, DC or DB,” says Towers Perrin senior consultant John Sansone.
Communication is vital, with the growth of defined contribution schemes, Sansone writes in the latest issue of the Pension Management Institute’s technical newsletter.
“The historic approach to communication pensions is likely to be both inadequate and dangerous” if the future of pensions in the UK is to be defined contributions. He adds: “The halcyon days of basic pension communications in a defined benefit world are over.”
“It may sound controversial, but instruments such as ‘default’ investment options and ‘lifestyle’ investment solutions only serve to perpetuate the message that employees don’t need to take responsibility for the outcome of investment decisions.”
He says providers need to stress to employees that retirement planning is a process, not an event.
And new technology can pay its part too. “Our research indicates that employers and trustees see an increasing role for the use of technology to deliver cost-effective employee education solutions to meet employers’ and the employees’ needs,” Sansone says.