The guide aims to to standardise the language used to describe options so customers can understand and compare products more easily without having to decipher technical terms.
The ‘Making Retirement Choices Clear’ guide proposes the new retirement options be explained as:
- You can keep your pension savings where they are.
- You can take your whole pension pot in one go.
- You can take your pension pot as a number of lump sums.
- You can get a flexible retirement income.
- You can get a guaranteed income for life.
- You can choose more than one option and you can mix them.
ABI Director of Policy, Long Term Savings and Protection, Dr Yvonne Braun, commented:
“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 in 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 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."
