Lord John McFall is considering proposals to limit the use of the word “pension” to describe state-provided retirement income in his role as chair of the workplace retirement income commission.
In an interview in this month’s Retirement Strategy, former Treasury select committee chairman McFall says the commission’s interim report, which is expected in June, will focus on incentivising young people to save for retirement.
He says the NAPF-backed commission could propose a fundamental change in the way that language is used to communicate with the public, with private “retirement income” split from the Government provided “pension”.
He says: “There is certainly a case for looking at whether the language has to change so that, for example, pension is what the state gives you and retirement income is what you provide for yourself.
“The term pension tends to put people off saving today because there is a notion that it is something you deal with later in your life.”
McFall says the commission is supported in spirit, although not financially, by the Department for Work and Pensions and will feed into the Government’s reform of the pension system.
He suggests that his interim report could reignite the debate over the flexibility of pensions after the Treasury last month chose not to pursue early access.
He says: “I think there is a case for looking at increasing flexibility of savings. We are looking for ideas which will make saving more attractive for younger people.”
The commission will reveal its findings at the NAPF conference in October.
Hargreaves Lansdown pensions analyst Laith Khalaf says: “I do not think the word pension is a problem, I think most people understand what it means. The problem is the jargon within pensions and the associations the word has with poor provision and misselling in the past.”