An overwhelming majority of the public do not understand common pension acronyms, according to a poll – casting considerable doubts over the way the financial services industry communicates.
Aegon surveyed 2,000 adults across the country about their understanding of 11 basic pension acronyms, including DB (defined benefit), DC (defined contribution) and SPA (state pension age). This revealed huge pitfalls in using common pension acronyms, with 74% of adults unable to identify any of the 11 tested. SIPP (self-invested personal pension) was the most known acronym, but only one in 12 (8%) could identify it. Only 2% of people knew that ESG stands for environmental, social and governance.
The findings come as the Financial Conduct Authority is set to introduce a Consumer Duty, with higher standards in all parts of the retail financial services industry to ensure customers receive “good outcomes”. The new duty acknowledges the need for clarity in communications, requiring firms to “provide timely and clear information that people can understand about products and services so consumers can make good financial decisions”.
Aegon said the survey’s results were “eye opening” and that the industry must take note.
“The financial services industry is not alone in loving an acronym, but that love isn’t shared by consumers,” said Aegon pensions director Steven Cameron. “Providing clear and understandable communication is extremely important when it comes to explaining financial products and services.
“We shouldn’t underestimate the power of using everyday language as it can make a huge difference between confusing or helping people to better engage with their pension and make informed decisions.”
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