By Dale Critchley, Workplace Policy Manager, Aviva
My general experience is that people do not always understand their pensions and the options open to them. Even those people who are experts in their own field and might have accumulated significant pension wealth can often benefit from even the most basic information at the right time to maximise their savings.
Pension providers have a huge amount of expertise that can be shared with pension savers to help them make better informed decisions, build bigger pension pots, or make their pension pot go further in retirement. Providing the information people need at the right time and in right format is a key principle of the Financial Conduct Authority’s (FCA) Consumer Duty, but it is also an essential part of running a pension scheme. Increasingly pension savers want to receive communications electronically. From a scheme perspective, electronic communication is cost effective and allows greater personalisation of messages. However, electronic communication also brings the Privacy and Electronic Communications Regulations (PECR) into play.
PECR are designed to eradicate spam emails and ensure people only get marketing messages which they have opted to receive. However, the definition of ‘marketing’ can also include pension scheme communications. For example, communications which promote other services offered by the pension provider or actions that are in the pension provider’s interest as well as pension savers’ interest.
The rules are the same but the Information Commissioners Office (ICO), The Pensions Regulator (TPR) and the FCA have recently issued joint guidance for pension providers. This is a great example of the regulators working together to help mitigate a problem that some of us in the pensions industry have been highlighting for some time.
The recent guidance provides reassurance that communications which are neutral in tone and avoid active promotion or encouragements when communicating facts to customers are not considered direct marketing, even where the topic of the message might affect the interests of both pension savers and providers.
The Regulators’ joint guidance includes some useful examples of communications that can be drafted in a way that they are unlikely to be marketing, including warning scheme members who may be saving too little to deliver an adequate pension or those who are withdrawing too much and are at risk of running out of money in retirement. Providing information about consolidating pension pots and directing savers to free tools or further support are also included as examples within the guidance. This clarification is welcome and will provide reassurance to pension schemes that existing communications are good to go if they are worded appropriately.
Greater confidence around the rules may also create new opportunities for schemes to provide information that points pension savers toward better informed decision making.
The clarification from ICO, FCA and TPR confirms they will work with the industry on further developments including the concept of Targeted Support, which could move pension providers from providing generic information to more tailored support for savers.
This all means that pensions savers should be better informed and supported to build bigger pension pots and make better decisions about how their long-term savings will provide an income in later life. Hopefully it might also mean people start to tell me about their pensions rather than needing to ask me about them.
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