So, the sinister sounding NEST Corporation has published the results of its initial research into the understanding of current pension terms among its target audiences of low-to-moderate earners and their employers.
It spent some 14 months reviewing existing research, advice and best practice before developing two sets of ‘narratives’ – one for employers and one for workers – which were then reviewed by external groups and tested through focus groups.
It has even set up a ‘plain-speaking forum’ and published an interactive game to encourage people to carry on the conversation about pension terms – along with a phrasebook (www.nestpensions.org.uk/plainspeaking) containing a list of common phrases and words that will be replaced.
To name a few – ‘annuity’ becomes ‘retirement income’; ‘asset classes’ become ‘different types of investment’; ‘benefit statement’ becomes ‘annual statement’; and ‘open market option’ becomes ‘shopping around for a retirement income’.
NEST Corporation chairman Lawrence Churchill said he believed this work was a “credible foundation” that would contribute to the drive to reduce jargon in the financial services world more generally.
Pensions minister Steve Webb said employers and workers alike find pensions very complicated – noting it was “vital” to use clear and simple language to make the auto-enrolment process as straightforward as possible.
Yet the real question is not whether or not we are communicating in the simplest possible way – it is quite clear the pensions industry as a whole could improve the way in which we communicate with members. The real question is how to engage people with pensions.
As I have mentioned many times in this column, most people are more than capable enough to understand pensions should they be sufficiently engaged.
People deal with complexity every day. Buying a mobile phone, shopping for a television, the purchase of a new car, switching energy provider. All these things are complex, all these things feature difficult language. Yet many people do take the time to learn about them and build their understanding.
Yet there are those who, to put it bluntly, can’t be bothered to put in the effort of trying to understand. Finding a way to get these people on board will be key.
A simplification of the language will certainly reduce barriers to understanding but it will not necessarily engage members with pensions. This is the real challenge, not just for NEST, but for the pensions industry and country as a whole.
Jonathan Stapleton is editor of Professional Pensions
Email him at: [email protected]
Follow him on Twitter: www.twitter.com/jonstapleton
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