If you work in the world of hairdressing you’ll know a lob from a wob, just like plumbers know the difference between an angle stop and a capillary connector.
For those of us who don’t work in these industries it’s complete gobbledegook. What are they talking about?
The pension industry is one place where jargon is rife, but it doesn’t have to be this way. With auto enrolment pension schemes meaning more employees taking out workplace pensions, we asked Paul Budgen of NEST, which has been set up by the government especially for auto enrolment, to outline the benefit of jargon-free pensions communications.
Let’s touch base about pension jargon
Jargon is everywhere. And, we may not even realise we’re using it.
Cast your mind back to your most recent working day. How many times did you say, ‘We need this completed by close of play’, or ‘Let’s touch base offline’?
Instead why not just say, ‘We need to have this finished by the end of today’, and ‘Shall we meet up later and talk about it?’ Why make things more complicated than they need to be? It just creates confusion.
In the world of pensions we’re on a mission to get rid of jargon. With auto enrolment giving millions of more people access to a pension, saving for retirement is now ‘the norm’ so at NEST we think we should talk about it using normal, everyday language.
Why your workers need jargon free communications
So far, thanks to auto enrolment, around 8 million people are newly saving, or saving more for their retirement. For many, particularly workers in small or micro sized organisations, pensions will be brand new territory. They’re likely to be wondering ‘What happens to my money?’, ‘Is my money safe?’ and, ‘What will I get back at the end?’
If they’re met with words like ‘accumulation’, ‘asset allocation’, ‘equities’ and ‘diversification’ it’s likely to cause confusion and their questions will remain unanswered.
Just take the following paragraph for example. What do you think of it?
During the accumulation stage, your capital will be invested in a range of equities, gilts and other asset classes. When you reach your benefit age, the decumulation stage can begin. You’ll have a variety of drawdown options available including trivial commutation, taking an uncrystallised pension fund lump sum, or buying an annuity.
Now compare it to this jargon free alternative, discussing the same topic.
Whilst you’re saving into your pension pot, the money you’ve built up will be invested in a variety of ways to help it grow. This could be through buying shares in companies or property, or making loans to governments and big organisations. When you reach your retirement date, which can be from the age of 55, there are a range of ways you can take your money out. This includes taking your retirement pot out as cash all in one go or in stages, or you could use it to buy an annuity which gives you a guaranteed level of income for the rest of your life.
As you can see, pensions don’t need to be complicated.
When setting up NEST, ensuring our communications were clear and jargon free was one of the key factors in creating a scheme that was easy for our customers to use.
Our research back then showed that unclear and needlessly technical language about saving for retirement acted as a barrier to understanding pensions. The research revealed that more than half of respondents (57 per cent) thought that sometimes the language used to describe pensions was so complicated that they couldn’t understand what the best option was for them.
And, around one in three people were putting off thinking about saving for retirement because they found pensions confusing.
If savers don’t understand what’s happening to their money, how much employer contributions help, how much tax relief they’ll get and how their pension pot is being looked after, it’s unlikely they’ll see the value in continuing to save for their future.
Clear communications help make auto enrolment easier for you too
If you’re setting up a workplace pension for the first time, choosing a scheme that uses clear communications is a no brainer. It’ll not only make your experience more straightforward, it could also save you time later on.
Just think about the volume of questions your workers are likely to have about auto enrolment. An easy to use scheme website, with clear information, is a great resource to be able to point your workers to. It means they can independently find answers to their questions quickly rather than coming to you.
If the scheme offers jargon free, communications templates that you can use with minimal adaption, this will also immediately save you time, especially if you don’t have enough resource to run an internal communications campaign.
Alongside these, tools such as the NEST phrasebook, which offers an A-Z of clear communication alternatives to pension jargon, can also help. And, it’s an invaluable tool for employers too.
So, to help you jargon bust, why not take 10 minutes out of your day to familiarise yourself with the key pension terms and what they mean. You could even do this whilst you’re generating an infusion of Camellia Sinensis or, to put it simply, making a cup of tea.
About the author
This article has been written exclusively for ByteStart by Paul Budgen, Director of Business Development of NEST. If you need further help with auto enrolment, or you just want to find out more about NEST’s scheme, there’s lots of information on the NEST website.
Help on Auto-Enrolment for small businesses
You can find lots more help on tackling auto-enrolment in these other guides;