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McFall: Limit use of the word “pension”

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.”


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There are 21 comments at the moment, we would love to hear your opinion too.

  1. Exasperated Me 5th May 2011 at 9:22 am

    They should limit the use of John McFall.

    A waste of space and taxpayer money.

  2. Another example of woolly thinking!

    A “pension” is perceived as something you deal with later in life…and “retirement income” isn’t???

    Young people on the whole are only interested in the “now” because saving can no longer guarantee that any aspirations will be reached (pre retirement or in retirement).

    Any government looking at this problem must realise that firstly the balance between income and cost of living must be redressed, then understand that only a sufficiently robust complusory plan (i.e. not NEST) will ensure that people will have enough income in retirement.

  3. Seriously??????

    “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.”

    So by calling it private ‘retirement income’, this will likely change it will it and make younger people want to save?

    I’m 28 and work as a Paraplanner in Manchester for a Financial Adviser, it doesn’t make any difference to me what they actually call it and I suspect most other younger people too, it’s still saving for the future no matter what name they put to it.

    So let’s stop messing about trying to waste time and additional money changing the names of pensions and investments and actually simplify the pensions so they are easier to understand for clients like they were supposed to do back in April 2006, instead we ended up with much more complex rules and regulations which confuse clients even further.

  4. Caitlin Loynd 5th May 2011 at 9:48 am

    He gets PAID to come up with this? George Orwell: eat your heart out, your “un-words” prophecy has come to pass!

    Sign me up for the next government pension commission, I want to spout meaningless drivel at taxpayers’ expense.

    Meanwhile I’ll get back to advising clients in the real world about how best to save for both their short term and long term goals, and not worry about whether I use the “soon to be prohibited P-word” in the process.

  5. Incompetent MPs Awards Team 5th May 2011 at 9:56 am

    McFall the x-schoolteacher lecturing on financials and x -TSC chairman who never responds to letter he can’t handle!…….mmmmmmmm

  6. Just read what Ros Altman is suggesting and looks of more use/interest than changing the name (which is akin to move the deckchairs on the Titanic)

    Independent pensions expert Ros Altmann believes she has hit on the solution. Savers should be allowed access to their pension, but only to their own money. All employer contributions and tax relief would be inaccessible. With these changes, the saver is not locking their money away and is not losing employer contributions. This, says Altmann, would boost savings levels, and would be a relatively straightforward reform.

  7. John Stirling 5th May 2011 at 10:07 am

    Well, if nothing else these comments prove unequivocally that calling something a ‘chair of the workplace retirement income commission’ doesn’t hide the self evident fact that they are a ‘spouter of mindless drivel’ from readers.

    I suspect this perspicacity is strong supporting evidence that calling a pension ‘retirement income’ won’t fool ‘young people’ into thinking that it’s something for the weekend.

    My proposal is that we mandate the language of calling a pension ‘going to the pub’ – so we use the questions ‘would you like to go to the pub’? and ‘How much would you like to spend at the pub’? – That way ‘young people’ will be much clearer on the benefits of having a pension, uh, sorry, on the benefits of going to the pub, and will be more motivated to save, using a pub to do it.

    It will also make annual ‘top ups’ a much easier proposition.

    What could possibly go wrong.

  8. John Blackmore 5th May 2011 at 10:08 am

    Just make “it” compulsory and call it what you like.

    No one has the right to be poor AND still expect the rest of us to feed them.

  9. Another quangocrat being paid to produce……….what exactly ?

    We need fewer people leeching from those who work for a living – get rid of all the quangos, and most of the politicians. Then simplify our tax and benefit system and get rid of all those State-paid penpushers who purport to be doing something useful but are actually employed to move paper around their desks.

    Then. perhaps, there will be sufficient left in the ‘pot’ for the government to pay a decent state PENSION rather than a pathetic PITTANCE.

    Eureka ! That’s it Mr McFall. Let’s start calling it a State PITTANCE and people may then begin to realise that they need to start planning for their otherwise miserable futures. Now I have solved the semantic problem that this moron has been struggling with, he can be given the boot – trouble is, having been doing his ‘job’ for more than 5 minutes he’ll be in line for a handsome redundancy package and a bloody great RETIREMENT INCOME funded by guess who !

  10. Julian Stevens 5th May 2011 at 10:20 am

    I suggested exactly this many moons ago in a letter to the Pensions Minister, primarily because successive governments have inflicted so much damage on the whole pensions framework that pension these days has become almost a dirty word. But, unless the level of retirement income that can be derived from a given amount of retirement fund is unshackled from annuity rates, not to mention reducing or better still removing altogether the punitive tax charges inflicted on unspent funds in the wake of death in retirement, a mere change of name isn’t going to have any effect on the attitude of the general public towards saving for retirement.

    If you’re going to change the name from pension to retirement income, then there has to be some tangible benefit associated with so doing, notably removing annuity rates entirely from the equation.

    This proposal, on its own, sounds like nothing very different from changing the name of the FSA to the FCA ~ it’ll just be the same thing with a different coloured sticker. So what?

  11. Meddling is the word.

    If they had wanted to do something then they should have allowed auto-enrolment to existing schemes a few years ago to see what the general public’s actual reaction is to “nudge” etc.

    They have waited and wasted 5 years of savings for some people.

    Maybe McFall can dream up a new word for “wasted” as well

  12. Lord Mcfall I do wish you would refrain from making any comments regarding pensions.Was it not you that stood by while the Prudential plundered its inherited estates to the tune of 1.6 Billion pounds at its policyholders expense to pay for mis-selling costs to support new business and to pay shareholders tax bills.What have you done today to make you feel proud?

  13. Roz Altman and Julian Stevens have very nearly cracked it. Access to personal contributions – great!! Remove all tax on unclaimed benefits @ death and simply make it compulsary for unclimed benefits on death to transfer as a value for DB and DC schemes to the death benefit nominee as, you guesssed it, a DC pension in the death benefit nominee’s names.

    Onwards and sidewards!!

  14. Steven Farrall (Adviser Alliance) 5th May 2011 at 10:39 am

    More grandstanding by failed McFall. Limit the use of language eh? For your information McFall, ‘1984’ was a warning, not a manual.

  15. Calm down everyone, it seems to me he’s just suggesting simplifying the language and making things more accessible to Joe Public, in a bid to getting them to think differently

    I’d agree with that, and NEST recently concluded the same thing.

    The headline and introductory paragraph might be a bit ‘overcooked’ that’s all.

  16. I have thought for some time that the state pension should be renamed to something like “Minimum Income Support”.

    Making it clear that the taxpayer only provides a bare minimum level of benefit in retirement is the easiest way to encourage people to save.

  17. Just checked my watch but it says May 5th not April 1st! His aims are laudable but as is common with those who decide policy he hasn’t a clue! How many people has he advised on pensions or retirement income, how much advice has he personally sought? We have just passed the fifth anniversary of A Day and I haven’t had one client ask me about their Pension Commencement Lump Sum and not one has understood the phrase unless I followed immediately with Tax Free Cash. Same with Tied and IFA, people used to understand that and just as they did they shuffled the pawns around on the board and now no one, including many advisers, know the difference between the varying shades of grey. Hey ho as long as Jo ‘the consumer’ Public keeps paying for this utter twaddle through our fees, policy fees and bank charges why not keep yourself on the self serving yet pointless gravy train through quango land!

  18. Julian Stevens 5th May 2011 at 6:02 pm

    Perhaps John McFart would be a more appropriate appellation.

  19. jeremy melton 6th May 2011 at 10:57 am

    5 years ago I said that the solution to getting people to save for retirement was to create a pension-ISA. If you lock-up up your money till retirement you get tax-relief on the way in, if you want access to the savings/investments before retirement you use an ordinary ISA. You could of course have both. Simple!

  20. Andrew Harwood 8th May 2011 at 9:16 am

    I do not wish to be too cynical but I am afraid Mr McFall needs to talk to someone responsible for marketring pensions before wasting his time changing termonology. Similar to most types of savings pensions needs to be sold and using words with the same meaning does not assist the sales process. If it did then this would be misleading to the client. I think most adults understand the meaning of pensions and if they then think they are buying something different because it is called retirement income then more fool them and shame on us.

  21. Lord McFail?

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