We need to get rid of pensions jargon
Anne-Marie Winton believes the way we communicate with people about pensions can prevent engagement.
It has been said that learning about pensions is like learning another language: a very difficult language. And if the Bank of England’s chief economist is prepared to admit that he cannot “make the remotest sense of pensions”, the barrier to understanding for anyone without a master’s degree in economics clearly is incredibly high.
Part of the problem is surely the vocabulary and grammar structure of the pensions language. In April, the ABI launched a consultation on simplifying the language of retirement options: Making Retirement Choices Clear, the NEST phrasebook (in multiple editions) has sought to define commonly used pensions terms, and various other esteemed authors have made valiant attempts to de-jargonise the jargon routinely used in the industry. But are any of these efforts good enough?
In March 2014, the Department of Work and Pensions commissioned research to find out what people thought about workplace pensions in general, and automatic enrolment in particular. At that time the ‘We’re all in’ multi-media advertising campaign was running, although ‘Workie’ had yet to be born and was still a ball of fluff in an advertising agency’s storeroom.
About half of those surveyed thought a ‘workplace pension scheme’ was a good thing for them personally, and 8% said they would never save into a workplace pension. The survey also looked to discover whether the advertising campaign around automatic enrolment was helping make pension saving a social norm.
Broadly, the most common outcome on seeing or hearing advertising was chatting to family and friends. But seeking advice, or approaching their employer, or even going online barely registered. It seems the social norm of going online for the latest on Game of Thrones or the Kardashians is not apparently a social norm for seeking information about pensions.
What I rather suspect is the lack of engagement directly correlates to the language used to describe workplace pensions saving (and the lack of blood and selfies). And if you are lucky enough to have been a member of an occupation pension scheme, confusion is no doubt generated by the change in terminology over time.
Terms used in the members’ booklet on joining may be very different to those in use now. For example, tax-free cash became a pension commencement lump sum and then an uncrystallised funds pension lump sum (or taking ‘cash in chunks’, according to Pensions wise, which has the virtue of blunt simplicity although little linguistic elegance).
As a pensions lawyer, I have been trained to avoid certain words: using ‘guarantee’ to describe a defined benefits promise may be a hostage to fortune. And ‘deficit’ can mean many different things, depending on the method of calculation.
So seeking simplicity in pensions language is perhaps the Holy Grail. Looking for synonyms to try to find clearer ways of defining pension terms can generate absurd results: is defined contribution really the same as a ‘described bestowal?’ Or are defined benefits better described as a ‘delineated perk?’
The Pensions Dashboard – if it comes into force – will be the acid test of explaining pensions. A picture may say a thousand words, but in pensions, we need the words too.
Anne-Marie Winton is a partner at ARC Pensions Law
What I rather suspect is the lack of engagement directly correlates to the language used to describe workplace pensions saving.
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