Sting in the tale - So simple and plain
Here I'm reproducing an extract from a press release that was put out by the Treasury Select Committee following its recent inquiry into the proposal for a National Pension Savings Scheme (NPSS):
A model for future private pension saving for people on around average earnings must be "more ready to wear and less made to measure" according to Treasury Select Committee chairman, John McFall MP.
He added that gobbledygook should be eradicated and plans should be drafted in uncomplicated sentences in plain English that people can understand.
McFall was speaking following the publication of a committee report which concluded that pension plans for middle income earners should have simplicity and near-universal suitability, if the costs of regulation are to be avoided. He said: "Just as protective clothing has to be waterproof, pension plans to protect people in their later years have to be crystal clear. I'm not being disrespectful here of people's ability to understand and complete the paperwork for pensions plans.
"However, the committee is saying that some of these plans are far too complex when they should be accessible, simple and straightforward. They should not be couched in obscure language, jargon and gobbledygook.
"Pension plans should be tailored to be inclusive of people in all walks of life, not exclusive to some. They should be more ready to wear and less made to measure. This is a wake-up call to the pensions industry to put its house in order in this regard."
He added: "In taking forward the proposals for private pension saving arising from the work of Lord Turner and his colleagues on the Pensions Commission, the government must avoid repeating the mistakes of stakeholder pensions.
"In that case, the way competition developed, together with regulatory requirements, created a model which is uneconomic for middle income earners."
Hmm... Well I'm supposed to be good at stripping out the gobbledegook from pension-speak, so let's have a go. There must have been a better way for us to have promoted pensions for all in the past.
How about: pension savings are unsuitable investments for millions of people in the UK workforce; or, a pound saved in a pension will be worth less than one pound for millions of people and for many may actually be worth nothing; or, people with average earnings, who didn't buy in to the stakeholder pension offer, with means testing so rife in the UK and the unfair way pension savings are treated by the government did the right thing.
That all sounds pretty straightforward to me - easy enough for Joe and Josephine Average to understand. The trouble is, it's hardly going to get people queuing around the block to buy into the NPSS is it?
The thing is, if we don't want a repeat next time of the near apathy that accompanied the government's last big idea of stakeholder pensions, we really do need to make sure that a pound saved in a pension really does make savers at least a pound better off than non-savers. It is not something that can be achieved by reducing means testing though; it can only be achieved once the government has removed means testing entirely for pension savers. Until then we are in the 'made to measure' world and not the 'one size fits all' world, and there's nothing the industry can do about that; that's the government's job.
First published in Pensions Week, 10 July 2006