The Association of British Insurers has this week launched a consultation and draft guide aimed at simplifying the language used to explain freedom and choice to savers.
The pensions industry has been aware of its propensity for jargon for a long time, with many schemes working individually on ways to simplify communication of pension issues to empower their members to act in a world of increasing complexity.
Having something well thought through means pension companies will be able to communicate well, much more efficiently
Mark Scantlebury, Quietroom
The draft guide, ‘Making retirement choices clear’, was created by the Pension Language Steering Group, which was set up by the ABI to implement a solution to the communication challenges around freedom and choice, and includes industry bodies such as the Financial Conduct Authority, Money Advice Service and HM Treasury.
It is “designed to ensure that language relating to the retirement choices introduced on April 6 2015 are explained and communicated to customers across the whole long-term savings sector in a clear, consistent manner, avoiding technical terms where possible”.
Malcolm Tarling, chief media relations officer at the ABI, said it is vital that everyone understands their pension options.
Communication principles of the ABI's draft guide
• Communications about pension freedoms should use language that is accessible and avoids technical or legislative terms. Where such terms are used, plain-English explanations should be provided, drawn where possible from language based on research. Language should be framed positively to encourage engagement.
• Communications with customers should use language that is proven to be understood by customers.
• Anyone communicating with customers should be upfront about any tax, fees and/or charges involved with particular retirement decisions, and ensure they are described clearly and simply.
• Engagement with customers should instil a sense of responsibility and ownership of that customer’s pension and their retirement options.
• All communications should be relevant to the customer and appropriate to the channel.
• Communications should acknowledge the importance of relevant life events to be sensitive to customer preferences and circumstances. There is no one-size-fits-all approach to retirement planning.
• Customers should be signposted to Pension Wise or a regulated financial adviser wherever it might assist a customer (in addition to where stipulated by existing legal and regulatory requirements).
“Pensions can be complicated, so it is important to ensure that the language used is as clear, simple and consistent as possible to help people make the right retirement choices. This guide could make all the difference, and this consultation will help ensure that we get it right,” he said.
Rules of engagement
The guide outlines a series of principles to be observed when communicating with customers, to maximise the chance of a positive outcome. These include rules such as “engagement with customers should seek to instil a sense of responsibility and personal ownership of that customer’s pension and their retirement income options” and “all forms of communication should be relevant to the customer and appropriate to the channel”.
Members of the industry welcomed the consultation. Kate Smith, head of pensions at provider Aegon, said the company supports the aims of moving towards more consistent language to help demystify pensions.
“Consumers can be easily confused when considering retirement choices and put off by over-technical language or differences in terms used across the industry,” Smith said.
She added she was looking forward to the term 'uncrystallised pension funds lumps sum' becoming defunct.
However, Smith also said: “To be truly successful, there would need to be consistency across the industry including pension providers, trust-based schemes, mastertrusts, advisers and public guidance bodies. In places, this might be best led by the government and regulators.”
Mark Scantlebury, co-founder of communications consultancy Quietroom, said it was right the industry was approaching communication from a layman’s perspective.
He said: “For a long time, we’ve spoken a language and expected others to learn.”
“Having something well thought through means pension companies will be able to communicate well, much more efficiently.”
Scantlebury added that simplicity is key: “There’s no need to reinvent the wheel, we only need to get it right once.”
However, he said the Pension Language Steering Group risked being too involved in pensions to simplify them well.
“These people are technicians,” he said. “And we’ve had technicians working on this forever. Where are the ad agencies in there? Where is the consumer group?”
