The Association of British Insurers (ABI) is launching a consultation into the language used around pensions and retirement savings.
Its consultation will inform the work of the Pensions Language Steering Group, which involves regulators, industry, consumer groups and the government. The group is working to develop a new guide that simplifies and standardises pensions language.
The aim is to help people better understand their retirement and long-term saving options, more easily compare products, and remove confusion around technical terms that have become prominent following the introduction of the pension freedoms in April 2015.
The consultation seeks to gather a wide range of views, including from consumer groups and the media. It will close on 19 June 2016.
Yvonne Braun (pictured), director of policy, long-term savings and protection at the ABI, said: “The industry recognises that pension language can be confusing and is working to make sure more people understand the new options available to them for their retirement.
“Customers who are engaged [with] their pension are better able to make decisions that suit their individual circumstances so it’s important that we make these options as clear and comparable as possible.
“This guide to making retirement choices clear could make a real difference by helping people to better understand their options. But we need the wider sector to contribute to the consultation and implement the guide so that simple language can be used consistently across the whole market and by all those talking to people about their retirement income options.”
Nathan Long, senior pension analyst at Hargreaves Lansdown, added: “A guide to pension language can hopefully consign the use of terms like uncrystallised funds pension lump sum (UFPLS), decumulation and benefit crystallisation event to the scrap heap.
“Focusing on improving consumer understanding will help people make confident, appropriate and informed decisions when it comes to choosing what to do when drawing from their pension. Using words everyone can understand, even if they don’t have a PHD in pensions, is crucial to improving understanding and will also help to build trust with pension providers.”