A new pensions language guide has been launched by the Association of British Insurers (ABI) to help reduce the level of jargon that may be impacting an individual’s ability to make the best decision regarding their pension pots.
The guide aims to make pensions terminology simple and consistent in order to help people better understand their retirement options.
Research on current terminology by Money Advice Service and ComRes found:
- ‘flexi-access’ drawdown and ‘uncrystallised’ pension funds are confusing terms and should be removed
- terms ‘taking cash’ or ‘chunks’ are seen as informal
- tax and fees should be outlined upfront
- people want pensions language to help improve their financial management by encouraging them to take responsibility.
Known as the ‘Making Retirement Choices Clear’ guide, ABI has proposed retirement options to be explained as:
- keeping pension savings where they are
- taking your whole pension pot in one go
- taking your pension pot as a number of lump sums
- flexible retirement income
- guaranteed income for life
- choosing more than one option and mixing them.
ABI Director of Policy, Long Term Savings and Protection, Dr Yvonne Braun, said:
“This guide to making retirement choices clear could make a real difference by helping people to better understand their options. But we need the wider sector to contribute to the consultation and implement the guide so that simple language can be used consistently across the whole market and by all those talking to people about their retirement income options.”