The changing language of the pensions landscape09 June 2016 Back to results
Do you know your flexi-access drawdown from your defined benefit? Do you feel that you require an in-depth knowledge of the pension language in order to learn more about your retirement savings?
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The options when it comes to considering retirement choices can be overwhelming and the sometimes over technical language can add to the confusion for some. Personally, I’m looking forward to seeing the end of the term ‘uncrystallised pension funds lumps sum’ – which we acknowledged was a mouthful from its introduction on April 6 2015. When technical terms are then abbreviated into 3 or more letter acronyms like ‘UFPLS’, the terms become even more confusing so cutting down on these lengthy technical terms is something for us all to aspire towards.
Research by Money Advice Service on the ‘language of retirement’ found that the “overall understanding and confidence around pensions is low. Pensions language should therefore be accessible, reassuring and not suggest any expectation of prior knowledge.”
This does not mean that the language should be over simplified. As we know, the pension landscape is complex and language must accurately represent the options available. However, there may be less of a need for lengthy or overly technical or legislative terms which may be meaningless to customers and may deter people from taking an interest in their own financial future. If you need some clarity around financial language, the team at Aegon Assist could be able to help you.
Taking responsibility for your finances and not leaving your retirement planning until the last moment is key to being ‘retiready’. A cross-industry group, including the government and regulators, led by the ABI, has highlighted this issue and is looking to simplify language to help make retirement choices clearer. To be truly effective it may be that the regulators and Government can take a lead, particularly when designing new concepts by looking to avoid introducing new terms like the unpronounceable UFPLS or FAMR” (Financial Advice Market review) in future.
Making pensions accessible
Everyone in the financial sector should all be striving to make pensions as accessible and engaging as possible. On the one hand, we don’t want to discourage creativity. On the other, there are some core concepts that would benefit from a single term industry-wide. This should cover not just life companies but also state pensions, trust-bases schemes, and public guidance bodies such as Pensions Wise.
We do hope we can wish a (not so) fond farewell to ‘uncrystallised pension funds lumps sum’, we can’t say it’s been too nice knowing you.
By Kate Smith, Aegon Head of Pensions