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The other day I met another regular contributor to the Adviser Lounge, Jamie Jenkins, for a spot of lunch and a discussion around auto enrolment and some of the challenges providers, intermediaries, employers and employees face both now and in the next few years.
We talked about loads of different stuff including the power of the nudge (and the fact that the government now have a ‘nudge’ department), capacity crunches and the what we can learn from international forays into quasi compulsion type retirement experiments.
One of the things I suggested, more to spark a debate than to suggest an immediate revolution, is that pensions shouldn’t be called pensions anymore….
I suggested (and only partially in jest) that the word “Pension” is now toxic and we should seriously look at changing the name of what we call a vehicle to help us save for retirement.
There are plenty of times when I’ve heard people not involved in the financial world say the following…
“Pensions are rubbish….look what’s happened to pensions in the past few years. You’re better off investing in X”
There are a range of arguments on making pensions more attractive by improving flexibility, or reducing charges, or giving people the ‘nudge’ of quasi compulsion in the form of auto enrolment.
However the question I’d ask is that outside the bubble of the financial world I’m wondering if the word ‘pensions’ is too tainted….or even worse….too Boring!
In Australia, Pensions are colloquially called “Super’s” (short for superannuation)…now I don’t know about you but if I had a choice between a “Pension” and a “Super” I’d rather have the latter.
Jamie’s take when we discussed this at lunch was slightly different and he argued that the american equivalent of the pension, the “401k”, isn’t the most attractive name for a retirement plan but is pretty well respected in the US and potentially the name has no impact or having a name which sounds really legislative (like 401k) works as well as a ‘quirky’ name (like “Super”)
So, maybe a name makes no difference. but maybe (and just maybe) having a more interesting name than ‘pension’ in conjunction with a number of other changes might mean more individuals take ownership than ever before and I’ve got some suggestions….
How about “Fund Accumulated Benefit” or “FAB” (coincidentally the name of my favorite lolly)
or
to reflect the long term nature of saving for retirement – “The Marathon Fund” (it could be re branded as “The Snickers fund” later on)
or
we could go for something obscure and just call it “Alan”…..
after all, anything might be better than “Pension”.
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however I’m interested in your thoughts….
Could changing the name of retirement saving make any difference? or are the range of other changes (including auto enrolment) enough to generate longer term engagement back into ‘pensions’? Do you think that the word ‘pensions’ has become a toxic term in the UK today?
I look forward to hearing from you.