I hate to say it but I read an insightful post by our very own Matthew Rankine on the company blog the other day. (see blog here)
It touched upon something that is key to getting people to save but which continues to be overlooked – the language we use. To get people putting money aside for their futures we need to be speaking to them at an emotive level and in a language they can understand.
Industry jargon
It’s taken for granted that this is what we need to do and there have been all kinds of initiatives over the years to make it happen. And yet for some unfathomable reason we never seem to do anything material about it.
Instead the same old terminologies and jargon persist — ‘auto-enrolment’ being a case in point (which grey bureaucrat in which grey building of Whitehall came up with that one?).
Unfortunately, until we rewrite the language of pensions I cannot see how the retirement crisis will be averted. It’s fair to say that our industry, despite numerous efforts to the contrary, continues to talk at cross-purposes with the consumer in so many areas. And together these linguistic disconnects represent a formidable obstacle to getting people to save.
Pension tax relief
Take ‘Pension tax relief’. You know what it means, I know what it means but does the man in the street really know what it means? As Matt points out, it beggars belief that the government hasn’t rebranded ‘pensions tax relief’ into something a bit more accessible and everyday. It’s arguably the biggest USP of pensions, after all.
‘Free money’ as a way of describing ‘pension tax relief’ is probably a bridge too far given that you need to save something in the first place to get it, but ‘pension bonus’, ‘pension boost’ or ‘pension top-up’ are phrases that the man in the street can understand and relate to.
And even if they still don’t understand what it means, it’s clear that a ‘pension bonus’ is something that will benefit them in some way. ‘Pension tax relief’, by contrast, could simply mean paying slightly less tax when paying into a pension.
Pensions time bomb
The irony is that we have perfected the vernacular in relation to the consequences of not saving adequately for our futures (think ‘pensions time bomb’ – clear enough) but somehow struggle to do it in relation to the process, the mechanics, of saving.
I’d be keen to know if any IFAs have any delightfully simplistic or simply very clever ways to describe pension tax relief. How do you explain to people in plain English the single biggest USP about pensions, i.e. that that you get relief at your relevant tax rate on contributions?
PS. Clearly I don’t see the need to rebrand all pension terminology. Sipp is just fine, thank you very much. God knows how much it would cost us to rebrand all our marketing material.
John Fox is managing director of Liberty SIPP
