Pension statements could shock – Mercer
UK - Occupational pension scheme members could be in for a shock when they receive statements explaining the funding position of their scheme this week, says Mercer Human Resource Consulting.
Most schemes are legally required to send summary funding statements to their members by September 22, outlining their funding position in relation to the cost of securing benefits with an insurance provider.
"The statements could come as a shock to many members, as it is rare for trustees or companies to disclose their scheme's funding position on an insurance buy-out basis,"
said Mercer principal Deborah Cooper.
"While trustees should not try to sugar coat the numbers to make them more palatable, it is important they put them into context for members. The statements represent a snapshot of pension schemes at a particular date, and the shortfalls in most schemes will continue to reduce over time."
Mercer calculates that more than 10m funding statements will be issued by private sector employers. About a fifth will be sent to existing members while around 4m will be issued to pensioners and the same to deferred scheme members.
Trustees have had at least six months to issue the statements, but many have not yet sent them. Nick West, principal in Mercer's Communications Consulting Business, commented: "We are likely to see a flurry of activity at the end of the week, when employers and scheme trustees rush to get the statements through the post.
"Some schemes have taken the bull by the horns and already told their members what to expect in the statements, but many have not even broached the subject."
Elsewhere, the Society of Pension Consultants said there was "much work still to be done" on government plans to revise occupational
Chairman Mark Ashworth said of the proposals, in a White Paper: "One of our chief criticisms is that savers may be misled.
"The government suggests that the proposals should mean that people see a greater return from their private savings than they would under today's system.
"We suggest that the Government exercises a great deal of caution before allowing generalisations such as this to appear in any future material promoting the new system of personal accounts."