CorpComms Magazine

I have always dreaded being asked what I do for a living at social gatherings. Starting my professional life as an investment analyst in the 1980s, I bore the brunt of comments about braces, Porsches and bonuses. Moving to financial PR at the end of the century, the problem became, if anything, more acute although I will not bore readers with the comments about spin doctors and Alastair Campbell.

However, whenever I was asked about my previous jobs, at least they provoked a response, whether positive or negative. What I was not prepared for, on entering the UK life sector some 18 months ago, was the sheer lack of interest anyone has in the pension industry. Aside from a muttered, nervous 'I better do something about that', almost everyone I come into contact with has absolutely no interest in this sector. Too scary, too complicated, too much.

As a result, I have taken to conducting random straw polls whenever I am with a group of people. While this is neither scientific nor verifiable, I can now conclusively state that no one with whom I have met recently is able to define an annuity.

They are not financially illiterate either. My mother is a retired banker who is a member of MENSA. She receives monthly payments from my late father's pension scheme and a modest income from her own. She continues to refer to her 'pensions' and was not able to explain what an annuity was despite several promptings from me. I recently attended a lunch to hear David Cameron speak. While I did not ask him for his views, the audience, comprising professional, well paid individuals, were unable to explain an annuity. Save one. Unfortunately, he had planned well and considered annuities to be irrelevant to his particular financial planning.

Understanding the issue

Thus, we are faced with a situation in which, according to my research, those who would benefit from understanding annuities, don't; while those who do, do not need them in the first place. Is it any wonder that there is considerable support for the Conservative's position on annuitisation at 75?

Mulling this over, I began to realise that the problem may be semantics. Everyone I know thinks they understand pensions. They are long-term savings for the time when you no longer earn money from employment. The problem is that they also think that the money they receive each month in retirement is also called a pension. As one friend recently put it, it was a car when I drove it into the garage, why is it a tractor when I take it out again?

I realise that the more technical amongst you will point out that an annuity is only one part of the retirement planning package and that there are many other products or strategies involved. Well, yes, but for the vast majority of people coming into retirement outside of direct benefit schemes, an annuity is likely to be the major source of their income. Not knowing anything about this until the last minute is, I would suggest, a failing of the industry's communications.

At this point, you would expect a representative from Just Retirement to bang on about earlier, clearer communications with potential retirees, going on to highlight the benefits of shopping around and seeking potential enhancements. I will come onto this - it's in my contract - but, for now, I would like to take on the question of 'What's in a name?'

I believe that it is now time for the wider retirement industry to scrap the word 'annuity'. Successive research reports by ourselves and others have shown that no one in the target group really understands what is meant by this term and many appear to be put off by the name alone. If we, as an industry, are serious about achieving more engagement with our ultimate customers, the question of the product's name should be tackled head on.

What's in a name?

With what should we replace the term 'annuities'? Given the results of my straw polls, I respectfully suggest the word 'pensions' as a replacement. Although I am sure that there are many technical reasons why this will be difficult, I should point out that calling for action on 'the pensions crisis' appears to have more traction with the target audience than bemoaning 'the annuities crisis'. It would certainly help my mum, who calls her annuity payments a pension in any case.

As my title suggests, my role is not to work out the intricacies of how such a name change would occur. Rather, I am in the privileged position of calling for change without actually having to do the work. Therefore, I now strongly believe that this can only occur with the active help of the Government and the relevant departments.

At a recent roundtable, the issue of cultural change was raised in relation to the lack of engagement between the life industry and its customers. It was pointed out that cultural change is possible and the smoke-free nature of our pubs was cited as evidence. However, that we can now enjoy a pint without a cigarette was not the result of a groundswell of public opinion. It required legislation to make us stub out.

We cannot rely on research reports, industry campaigns and learned roundtables to make our customers engage with us. In order for the public to engage with planning for retirement, I believe that we need a carefully targeted public information campaign led by a coalition of relevant government departments which seeks to inform people of the task at hand (saving for retirement) and how this can be accomplished.

Jargon overkill

Such a campaign would also provide a good opportunity to address the issue of the jargon within the industry. As a relative new boy to the sector, I am overwhelmed by the sheer number of technical terms and acronyms. Faced with USP (unique selling point), FSA (Financial Services Authority), ABI (Association of British Insurers), TPAS (The Pensions Advisory Service), tPR (The Pensions Regulator), EBC (Employee Benefits Corporation) and IFA (Independent Financial Adviser), I am still amazed that no one has thought to use FUBAR (Fouled Up Beyond All Recognition) and be done with it. If people fear what they do not understand, the industry's marketing tactics to date seem to adopt the 'fear and ignorance' strategy of the Roman Catholic Church of the mid 16th century.

We need to demystify the lexicon of the pensions industry and then use our new thesaurus as the base for the campaign. We should avoid acronyms wherever possible and seek to use clear English rather than industry terms. Just Retirement welcomes the work started by the ABI in creating a glossary of terms for pensions but this should extend to a complete review of all terms used when communicating with the public. Fewer earth inverting implements and more shovels should be our maxim.

Armed with a plain English version of pensions jargon, I would request that the government draw on the work by Revenue & Customs in highlighting self assessment tax forms. It should use the same multi-media channels and aim to inform people as young as 30 of the task ahead and options available. If tax need not be taxing then pensions need not be boring.

I am sure the entire industry would back such a campaign and that, if required, funds could be made available to finance it. Indeed, there may be a case for a 'Drink Aware' style coalition from the industry to work alongside the various departments in raising awareness.

In closing, I am reminded of the Chinese proverb that 'It is better to light a candle than curse the darkness'. While I cannot accuse the industry of looking for a light, I have to say that we are currently faced with a brilliant array of individual candles, all calling for something different.

Remember, one candle, sufficiently bright, can illuminate even the darkest corner. 

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