Dirk Paterson: It’s a shame the citizens of Pensionsville haven’t yet learned the language of the outside world
The latest of the Pensions UK (formerly the PLSA) regular columns looks at the ‘impenetrable lingo’ the industry uses and explains why we need to start using the language of our saving community.
Oh, it's good to be back in the pensions village. What a home coming it is to arrive at Pensions UK after almost a generation away. I've played away from the pensions industry with a period in banking and as a consultant to a whole range of clients across financial services, law, education, tech and other industries.
Having returned, I can see what a difference auto-enrolment (AE) has made; the master trusts are generally thriving (there was a fear they may not be viable a decade ago); there hasn't been the mass opt out some feared; and the pensions industry seems to generally accept that not for profit has a real role to play in provision. Lower paid workers are saving consistently for the first time in a generation. All great news.
But of course, there are things which remain unresolved – we still don't have a simple system to merge small pots; the arguments over early access rumble on; and there is a lot of work to do to deliver retirement incomes for defined contribution (DC) savers at the end of the saving process.
You'll note I chose my words carefully in the remarks above, not because the issues are contentious (though they can be), but because there's a whole language around these concerns which is understandable only to those who speak ‘pensions'.
Jargon soup
Of course, I could have gone for the wonk language of ‘decumulation, accumulation, mandation etc', but I've spent over a decade trying to talk a language of marketing to ordinary everyday people with everyday phrases they can understand, so I'm reluctant to jump back into the jargon soup.
When I was at NEST the talk was all about making pensions accessible in language everyone could understand. I was responsible for launching the NEST Vocab book – which translated the language of policy experts into words and phrases anyone could understand. I thought then we'd made some significant progress. I believed that the brave new world of AE, and the new market that this had heralded into the industry, meant we were changing the way we spoke for ever. But my re-entry in the pensions orbit shows me that this effort (welcomed by pretty much everyone in the industry) was a flash in the comprehendible pan.
One of my frustrations about returning to pensions is that I now need to re-learn a language of pensions which I had thought we'd got past. Not only that, but as new problems begin to be aired, we've added a whole bunch of additional impenetrable lingo to the lexicon and I'm forced to remember that I've been outside of this exclusive club for a long time.
Learning the language of Pensionsville
Now, its lovely to be back, it really is. I'm not complaining. I'm enjoying seeing familiar faces who have been generous in welcoming me home to Pensionsville, but it's a shame we citizens haven't yet learned the language of the outside world.
So why do I find this so irksome? I don't think it's just because I have to question whether I understand relatively simple concepts dressed in opaque language, but I think it's because we haven't delivered on the promises we all made back in the day. Those being that we'd try and speak a language of our new saving population, who, let's face it, are the reason we're all in this industry.
My 22-year-old daughter was two at the time of the Turner Pension Commission and we were struggling with this issue around the time of that publication. Nowadays she was auto-enrolled into her company pension in her first job, but even being in financial services, she neither understands nor takes much interest in it. By contrast her Australian mechanic boyfriend of the same age will wax lyrical about his Super. He'll tell me about its investment growth and the contributions he continues to make (even while working in the UK) while showing me this on his phone.
We recently had a meeting with some policy officials from an Australian pension and they spoke a much more straightforward language than we did. I can't help thinking these two issues are related.
So why does this matter? Well one of the issues we face is that of engagement (contentious I know in a world of behaviour science). If we want our savers to make informed choices, we need to get them to understand the products and devices we're using to help them save for when they aren't working any more. That's because they are going to have to make decisions (even if we created a limited choice framework), so we need to start using clear language now and getting used to it.
Now I hear the arguments that this is B2B language of policy speaking to policy. That maybe the case, but why on earth wouldn't we want to be always speaking the language of our saving population?
My appeal to my colleagues in the pensions world is to not to languish in the luxury of our familiar phraseology understood only by cosy insiders, but to get into the hearts and minds and use the language of our saving community who need to know at all times what we're talking about.
More to come on this… In the meantime, thanks for having me back.
Dirk Paterson is deputy director of external affairs at Pensions UK
