There was a comment at the bottom of a story about pensions the other day. “When you say they had a £45,000 pension, what do you mean? Is this per year?” the reader had asked.
The figure was the average pot size, but the reader had a totally fair point.
People use the word pension interchangeably to describe the annual income they receive, the size of their pot, the contributions they make, the product they have, and the state payout.
Is it any wonder that those who do not work in the pensions industry are so confused?
The financial industry, as a whole, is terrible at cutting through all this and speaking to normal people in a way they can understand. It is part of the reason why pensions are so confusing, because there are just so many products and so many different things being referred to by the same jargon.
We need to get beyond this very quickly, because there is a new problem on the horizon: that of very inexperienced savers who find they have a lot of pensions because of auto-enrolment.
Which takes us on to the pensions dashboard.
I have written before about the dashboard, and why I am against it. In brief, there is no good having something that will not give you the whole picture – particularly if the pensions in question mean very different things.
The more I read about it though, the more questions I have, which will need answering in the feasibility study – and not just ones about the technology behind the dashboard.
For example, is Aviva going to willingly hand over to Prudential hundreds of bits of customers’ details that gives an insight into how their customers are behaving? In which case, what scant bits of information will one company be prepared to feed into a rival’s system?
Isn’t there one giant data protection risk? And doesn’t that make it a fraud risk?
We have already seen the advent of open banking, which is supposed to allow consumers to put all of their products in one place. That seems sensible, but in reality it means giving up loads of passwords and other confidential pieces of information the banks do not generally like you giving away.
Many banks have already changed their terms and conditions to make it clear they will accept no blame if you are the victim of fraud after doing this.
Will not the whole thing just be another massive cost that smaller advice firms will not be able to stomach? But if they do not, they will be left behind.
The pensions dashboard seems like a solution driven by the insurance industry to solve the problem of multiple pots, which will just become even more prevalent thanks to the brilliant success of auto-enrolment.
The real answer to that issue should be pot-follows-member (or portable pensions, as I like to call it), but of course the insurers do not like that idea.
We need to start again, and make pensions easier for people, using a language that they understand and building products they need.
We need to stop developing products that suit the insurance industry's need rather than the consumer's.
Tax planning is an expertise worth paying for
The tax burden is at its highest for 50 years, with families paying 34.6 per cent to the Treasury. That is worth shouting about, in my book.
Those of us in financial services should make a big deal about the money that is paid in tax. Not only will it silence the fools on the Left who want to plunder more tax revenues from the middle classes and above.
But it also makes people sit up and realise that tax planning is an expertise that should be worth paying for.
I would be very worried about the prospect of a Corbyn government attacking some allowances that look generous, such as capital gains tax.
At half the amount of higher-rate tax, it is a break that will not hang around for long if this Brexit deal does end in disaster.
Transparency is the answer
Advice fees were back in the news when a client complained about being charged £1,500 a year from a time-costed adviser. The fees were largely for what the customer thought was administration.
Think what you like about the fees, but it raises an important subject that has always beset advice firms: how to explain about the money they make.
The answer always lies in transparency. The reason trail commission ended was because of the fear of being open about it. Let’s not have a similar conversation all over again.
James Coney is money editor of The Sunday Times
