In the run up to Halloween I was looking up lists on the internet to try to work out what it is that people fear the most. Unsurprisingly, arachnophobia is near the top of most lists (and is by miles the top of mine), but so is glossophobia, a severe fear of public speaking.
So people are rattled by spiders and would rather not get up and speak in public. So what?
Well, I read in Money Marketing recently that people were scared to open their pension statements! That’s what.
Profile: ‘I know hundreds of people scared to open their pension statements’
That was a penny-dropping moment for me – it explained a lot. I spent a big part of my career in financial services speaking in public about pensions. No wonder it was so scary.
While I was looking up the lists online, by the way, I noticed that hippopotomonstrosesquippedalio-phobia is the name for the fear of long words. I mean, is that ironic or what? I’ve written it down in my notebook though, as I’ll probably use it in a future pensions talk.
And that’s the point, I suppose. I, or more likely people like me, will probably spend decade upon decade in the future travelling the country speaking at conferences about the scary intricacies of pensions, just as we did in the past. But the real point, that pensions are unnecessarily complex, never seems to hit home, does it? Particularly with those responsible for designing the complexities.
Are we in danger of finally getting simpler pensions?
I rather doubt people who save with Isas are scared by them. They probably understand them pretty well, and have no trouble knowing why they’ve got them and what they can do with them. Isas are simple, friendly and easy to understand. Nothing to be afraid of there.
But pensions? The phobia kicks in just at the thought of them – DC, DB, income drawdown, lifetime allowance, Sipps, auto-enrolment…and that’s before you even start considering the constant changes.It can be genuinely frightening.
And how much pension do you have in your umpteen different pension pots? Who often knows and how many people are scared to look?
Employers are required by law to provide pensions for their employees (or at least the majority of them), so we can’t avoid them. They are a fact of life, just like spiders.
Open Money acquires Jargonfree Benefits
So if we’ve got to have pensions what needs to be done to make them more acceptable to us? Nothing much really. All we have to do is to scrap all the existing pension rules and replace them with a simple Isa-based system with the tax relief up front – Exempt, Exempt, Taxed Isa. That would do it.
If we did this simple thing people would gradually lose their fear of pensions over time.
As history shows, however, our legislators absolutely love to complicate things, and would no doubt find the idea of pensions that ordinary people can understand quite scary in itself.
Follow him on Twitter @PensionsGuru
Comments