Every industry has its jargon but pensions seems to have more than most. It is time to end the confusion caused by terms that people simply do not understand.
It is bad enough the world of pensions has a language of its own but it is even worse that jargon is preventing people making the right decisions. Indeed, many do not know where to go for help.
There are three main ways people can get assistance: from their pension provider, from Pension Wise or from an adviser. Another source of help are the non-advised platforms or brokers. All of these services are good but they each do a different job. Of course, you will know that but the general public does not.
This is not the place to rant about the potential for customer detriment caused by the advice gap. But I do want to call for more clarity about the advantages and disadvantages of each information channel.
Take guidance, for example. Exactly what does it mean and who provides it?
The Government is spending a lot of money promoting Pension Wise. Its website says, “free and impartial Government guidance about your defined contribution pension options,” but in order to get the best outcomes and make the right decisions, the journey starts well before retirement age and must consider much more than money purchase pension pots.
While Pension Wise cannot cover defined benefit pensions and property assets, The Pensions Advisory Service (with no advertising budget) has been doing an excellent job for a long time providing guidance on all aspects of pensions.
Non-advised services also focus on the product options without being able to discuss the other factors with an important impact on whether or not to invest in them. Many people do not realise commission is paid on non-advised sales and how this distorts the market.
It is vital the industry finds a way of clearly explaining the different sources of help, guidance and advice, and the scope and limitations of each.
William Burrows is retirement director at Better Retirement