The document discusses research conducted on how pension savers in the UK view costs and charges related to their pensions. Some key findings include: - Most savers were unaware they paid charges and fees for their pensions. However, they were not surprised to learn this. - Savers want costs presented simply and consistently across providers, in pounds and pence rather than percentages. - Transparency around what savers pay is important to build trust. Not disclosing charges could make a provider seem untrustworthy. - Overall, savers care more about the total value and retirement income from their pension over the years rather than just the lowest costs.

1. SIMPLER STATEMENTS, CHARGES AND VALUE
Ruston Smith and Janette Weir

2. LOW KNOWLEDGE
Average household consumer debt £7,000
Average student debt of £45,000 in England
DISTRACTED BY DEBT
1 in 6 UK working age adults
have very poor literacy with limited vocabulary and
can’t read lengthy texts on unfamiliar subjects
….and on average we’ll change jobs 11 times
1 in 5 don’t understand
their bank statement
Everyday People – Their Challenges, Our Challenges
TOO MUCH INFORMATION
LOW SAVINGS
1 in 5 UK adults
have less than £100 of savings
TIME IS PRECIOUS
Those with children only have
17 minutes to themselves each day
We receive c.105,000 words a day –
Equal to 34GB when you add images

3. MEETING CUSTOMERS’ NEEDS
Pension savers continue to tell us they want information to be……
▪ Clear
▪ Short
▪ Simple
▪ Consistent
Pension savings are simple – we just make them complicated. But its improving…..slowly
• Standardised Simpler Annual Benefit Statements from October 2022 – two sides of information that matters most
• Standardised Assumptions: To provide consistency of projected pension savings
• Standardised Simple Costs and Charges - customer research completed and handed to DWP
More to do…..
• Explaining what members get for their charges – value and outcomes

4. MEMBERS’ COSTS AND CHARGES INITIATIVE
WHY
▪ Consistent simpler annual benefit statements are a big step forward
▪ But still no consistency of how we show the actual costs and charges that members pay across annual statements
HOW
• Like the Simpler Annual Statement initiative - key was to listen to our customers (pension savers)
• Research by Ignition House – approach and methodology agreed by DWP, FCA and tPR
• Consulted with industry stakeholder group
WHAT
Understand:
• Whether charges are important to see
• How they should be shown and expressed
• Broader research on value and outcomes – to provide better context

5. The Research
What Listening to our Customers Told us

6. Research – Key Messages
Q7. Before now, did you know that you were paying a charge for your pension?
Just 13% of members said they read their statement and understood it well
Base: All DC pension members aged 22-65 (1,016)

7. Research – Key Messages – Feedback on the Simpler Annual Statement
“My eyes were immediately drawn to the bubbles and the simple breakdowns.” Focus group respondent,
age 35+, low engagement.
“The way that's laid out, that's foolproof. Everything's there.” Focus group respondent, age 35+, low
engagement.
“As a front page that’s exactly what I’d want to see” Focus group respondent, age <35, low
engagement.
“It’s really clear, you can see what you have saved , what your employer has added, and the total. It’s
just a breakdown of everything” Female respondent, age <35, low engagement.

8. MEMBERS’ COSTS AND CHARGES INITIATIVE
Members are naturally more interested in the value of savings than costs

9. MEMBERS’ COSTS AND CHARGES INITIATIVE
Majority weren’t aware they were paying charges – but were not
particularly surprised
Q7. Before now, did you know that you were paying a charge for your pension?
40%
37%
34%
41%
51%
46%
32%
27%
30%
28%
26%
21%
25%
30%
14%
14%
15%
11%
16%
13%
14%
19%
19%
23%
22%
13%
16%
24%
All DC members aged 22-65
22-34
35 to 44
45 to 54
55-65
Male
Female
Age
Gender
Yes
No, but it is not surprising to me to see a charge here as this is the case with other financial products
No, but I had assumed that there were some charges that were being taken directly off the investments
No, and I am surprised to see that there is a charge
Base: All DC pension members aged 22-65 (1,016)

10. MEMBERS’ COSTS AND CHARGES INITIATIVE
Members have given a clear steer on how they want to see charges on
their statements
❑ Costs and charges that members pay do matter to them – they want to see what they pay
❑ Members prefer a breakdown – and a simple split of admin and investment fees is acceptable
❑ Costs should be shown in £s and pence, rather than %
❑ Costs represented out of every £100, rather than £1,000
❑ No real preference for costs, charges or fees. Price was not acceptable.
❑ Preference for the passive ‘has been taken’ rather than the active ‘we’ve taken’
❑ If no charges can be shown, this should be explicit on the SAS

11. MEMBERS’ COSTS AND CHARGES INITIATIVE
Q8. How interested are you in seeing the charges
you pay on your statement?
Base: All DC pension members aged 22-65 (1,016)
Q21. How important do you think it is for all pension
providers to present the costs they charge members
in a consistent and simple way?
52%
38%
9%
1%
Very interested Fairly interested
Not very interested Not at all interested
57%
39%
4%
0%
Very important Fairly important
Not very important Not at all important
Members want to see what they are paying in a consistent and
transparent way on all the statements they receive – to build trust

12. Research – Key Messages – Members’ Costs and Charges
“I think transparency is important. I think whoever's got a pension we want to know exactly what
we are paying. Especially as my money at the moment, it's not easily come by, is it? And we want
every penny to count.” Depth respondent, age 35+, low engagement
“You know, no one's expecting something from nothing. You don't expect to do work and not get
paid. Somebody has decided to take the money, spend time investing people's pension money. Of
course, that's going to cost. But just tell us what it's going to cost. And then it's freedom of choice.
If I want to pay 1.5% or if I want to pay 0.5%, that's up to me.” Depth respondent, age 35+, low
engagement
“Today I was shocked because I didn't know that we pay charges for a pension. And as much as I
clearly have not done enough research as I should have done on my pension, I don't feel I'm alone.
So at which point you'd be a bit, hang on a minute, it's sort of been back-doored in there. It
probably was somewhere in between all the jargon, but I think it needs to be more transparent. At
the end of the day, people should know what they're paying. And see if there are any alternatives
to that because you get loads of people asking you to switch your pension to them.” Depth
respondent, age 35+, low engagement

13. MEMBERS’ COSTS AND CHARGES INITIATIVE
Members take a dim view of providers who cannot show individual charges
Base: All DC pension members aged 22-65 (1,000)
Q20. Not all pension providers will be able to show people their personal charge on their statement.
If you saw two statements from two different pension providers and one itemised how much it charges and one did
not, to what extent would you agree or disagree with the following statements…?
17%
17%
13%
41%
39%
27%
29%
32%
24%
7%
6%
21%
2%
1%
11%
4%
5%
5%
The pension provider with no
charges is trying to hide their costs
The pension provider that is not
showing what they have charged is
not as reputable as the other
company
The pension with no charges on the
statement must be free
Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Don’t know

14. MEMBERS’ COSTS AND CHARGES INITIATIVE
When thinking about value for money, members did not think that cheapest
was always best
Insert montage

15. Research – Key Messages – Members’ Costs and Charges
Members take a dim view of schemes that can’t provide an individual charge
“I'd say prior to this session, I think that if it wasn't on the statement, you would think they're not
charging you. You'd probably be a bit naïve if they leave it blank. They shouldn't be able to do that. You
would think it would almost be illegal not to state that.” Depth respondent, age 22-35, moderate
engagement
“I think that actually needs to be made law and part of their legislation about all pensions. Because it's
not fair on someone that can't see all that information, who is making an ill-informed choice on which
way to go. I think they should all be made to do it. I know some businesses may struggle because they
haven't got the facilities, but unfortunately, that's business, isn't it?” Depth respondent, age 35+, low
engagement
Providers and Schemes should explain what members are paying for
“Sometimes you do get more for your money if it’s invested in better things. But you'd need to really
see a difference in their payouts to other companies to pay more. If someone was saying, I'll charge you
a hundred pounds a year where this company is saying £211 then show me why you're worth the
£211, why your investments are any better than this company that's charging a hundred. Or you'd go
with the hundred company, wouldn't you? So at the end of the day, it's based on proof.” Depth
respondent, 35+, low engagement

16. Research – Key Messages – Value for Money
Base: All DC pension members aged 22-65 (1,016)
Q14. To what extent do you agree or disagree with the following statements about pension charges…?
Members expect employers to be monitoring the level of costs,
performance and value

17. Key Messages and What’s Next?
KEY MESSAGES
• Members more interested in the value of their pension savings than the charges they pay
• Value to members means ‘how much they’ve built up – and what they get back at retirement’ - not the lowest cost
• The majority weren’t aware that they were paying charges but, equally, they were not particularly surprised to see them
• Members want pension providers and schemes to show and explain the charges they pay simply and consistently in pounds
and pence on all the annual pension statements they receive
• If providers and schemes can’t provide individual members charges they would think they were untrustworthy
• Transparency builds Trust
WHAT’S NEXT?
• Research findings handed to DWP
• DWP will consider the disclosure of pension savers’ costs and charges alongside the Permitted Charges consultation and
other relevant workstreamson and choices simpler for those saving for retirement