Employers should ensure that they use clear easy-to-understand language when communicating pensions to staff.
The National Employment Savings Trust (Nest) phrasebook outlines the common phrases that employees may find hard to understand, and suggests clearer alternatives.
1. Annuity becomes: retirement income
Regular income stream for the rest of an employee’s life
2. Default fund
Unless an employee chooses another option, their money will be invested in a fund chosen by the National Employment Savings Trust (Nest)
3. Trivial commutation becomes: Taking retirement pot as cash
If an employee’s Nest retirement pot is worth less than £2,000 or their total retirement savings are less than £18,000, they might be able to take this money as a cash lump sum instead of buying a retirement income.
4. Decumulation becomes: taking money out of Nest
5. Impaired life annuity becomes: A retirement income based on the employee’s health
6. Open market option becomes: shopping around for a retirement income
7. Fiduciary responsibility becomes: legal duty to act in members’ interests
8. Single life annuity becomes: individual retirement income
9. Joint annuity becomes: joint retirement income
A retirement income for an employee’s husband, wife, partner or civil partner that continues to be paid after their death
10. Default contribution: becomes minimum contribution
The law has set minimum amounts an employer must contribute for each jobholder, but they can contribute more if they want to.
Source: The Nest Phrasebook: Clear communication about pensions, The National Employment Savings Trust (Nest)