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?
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.”
