PensionsFeb 19 2020

Pensions need a rebrand

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There has a been longstanding debate about the use of the word ‘pension’.

We all know what it means, but is it a barrier against encouraging people to save for their retirement?

What does ‘pension’ mean?

The problem is partly that the word can confuse people or simply make them want to put their fingers in their ears and go “la, la, la”.

But what does ‘pension’ mean?

If you Google it, the top answer is: “A regular payment made by the state to people of or above the official retirement age and to some widows and disabled people.”

That is a poor and limiting definition, but it demonstrates the problem with the word. 

The truth is that a pension is simply a savings scheme, whichever way you chop, wrap or cook it. It is the name of an account where people can stash their money away until they need it when they stop working.

So why do we continue to use it to describe retirement savings when it is off-putting and somewhat misleading?

The latest team to attempt to wrestle with the problem is Fidelity, which last week published some research looking at whether simplifying the language around pensions might encourage more women to save.

According to its survey, just under half of women asked about the word pension picked the phrase “retirement income” as something that would make them feel more confident about engaging with their future finances.

A fifth said they preferred the term “later-life funds”, while just more than one in 20 and 7 per cent said “free money” was a more appealing alternative.

The notion of free money is obviously appealing, but is hardly the right way to explain what a pension or retirement planning is. And the phrase ‘later-life’ funds is clearly clunky and a little off-putting.

Retirement Income

The most popular option among women, ‘retirement income’, seems to do the job, although I reckon ‘retirement savings’ actually describes more simply what a pension is.

The research made an impact on social media – but perhaps not in the way that Fidelity envisaged.

The Daily Telegraph’s personal finance editor, Sam Brodbeck, took affront. He wrote: “‘Using different names for pension could boost engagement among UK women, says Fidelity’ – women of Twitter, how patronising is this?!”

Fidelity’s workplace investing director, Maike Currie, was quick to respond, saying: “Men were asked too. But this zoned into what women were thinking.

“They’re the ones with pension pots half the size of their male counterparts. Perhaps the real patronising thing here is not being used to hearing what women think?”

That view was echoed by Charlene Cranny, communications and campaigns director at the UK Sustainable Investment and Finance Association.

She says: “Pensions are boring for everyone. A rebrand is a plaster and a distraction. The festering wound is unequal pay, maternity versus paternity expectations, etc, etc.”

Royal London pension specialist Helen Morrissey weighed into the debate to mention the mutual insurer’s own research into why women do not invest.

“When asked if they considered themselves investors, many women said no despite having a pension,” she points out, adding: “We have much to do to boost understanding. While the research was aimed at women, the same could be said for men too.”

For me, that is the key point. As an industry we should be working to improve understanding, for people of all gender. If that means using gimmicks to get people engaged with the importance of saving for later life, then I am all for it.

My tongue-in-cheek suggestion to improve men’s engagement is to rebrand retirement savings schemes as ‘Pension Mach5 GTX – engineered for men, by men’, stealing from the beauty industry’s rather facile way of trying to persuade males to use cosmetics.

Frankly, anything that gets people thinking about and understanding why pensions are so important should be applauded.

Retirement for women

The separate issues facing women – that they are set to reach retirement with a fraction of the pensions wealth carried by men – is a different problem that obviously will not be solved by rebranding the word pension.

But making the issue something that is easier to understand will help everyone and could be an important first step in giving women more incentive to take whatever actions they can to reduce the future pensions gap they face.

Ms Currie says: “While it may not be possible to completely do away with the age-old terminology, our research identified a significant barrier for women in the way investment and pensions are talked about.”

Breaking down the barriers is crucial in helping everyone get to grips with the reality of their future financial situation and the opportunities that are open to them.

It is a longstanding problem and I would be glad to hear of possible solutions from anyone. It will not be easy to deal with the problem, but it is essential to try.

Simon Read is a freelance journalist