Many people do not understand language and terms relating to pensions, according to research commissioned by the national employment savings Trust (Nest).
Of the 1,967 respondents to the survey, conducted by YouGov, just 10% said they completely understood the term open market option, while only 23% said they were fully clued up on the term annuity. In addition, only 14% of those surveyed said they completely understood the term lifestyling.
In general, women tend to be less likely to claim they understand pension terms than men, while the likelihood of understanding increases with age. Employees on the highest incomes are more likely to claim they completely understand each term.
Terms that were easier for respondents to get to grips with were: contributions, estate, fund, investment, pension and nominated beneficiary.
The findings will underpin the language and phrases used to communicate Nest. The Nest Corporation has published a phrasebook to clarify jargon around pensions.
Steve Webb, minister for pensions, said: “As we move forward with radical reforms to automatically enrol people into workplace pensions it is vital we use clear and simple language to make that process as straightforward as possible.
Tim Jones, chief executive of Nest Corporation, added: “It is really exciting to get to the stage when we start to understand how we will talk about Nest.”
Helen White, director of life and savings at the Association of British Insurers, said: “We need to make sure that we, as a pensions industry, are communicating in the clearest and simplest terms with people so that they understand why it is good to save and what they can expect from their pension.”
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