The pension ticking time bomb: why we need more clarity

There are many issues with our pension policies, including the fact that we aren’t saving for them! A large part of the problem is how pension providers communicate. They need to up their game and communicate in plain language – or else governments are going to be left with a huge social welfare bill to pay



Imagine this nightmare scenario. You’ve worked hard all your life. You’ve paid into a pension scheme thinking it would suffice. And now, with retirement on the horizon, you find you were invested in the wrong funds. Your lump sum is less than expected. You’ve lost money due to some small print in a fund prospectus. The worry and anxiety is huge, and there are real negative consequences for your life too.

Unfortunately, this is a common complaint – across the first world citizens are discovering that what they thought their pension was going to provide for in retirement is not the case. But pensions are critical. How else can people plan for their future? How can we fix this?

Too much jargon turns people off of pensions

A big part of the problem is that people zone out when they’re given pension policies to read.

And we can easily see why.

The language is just way too complicated. Policies are full of gobbledygook, and long-winded small print, that only means something to brokers or financial industry professionals.  Lots of people are unsure of what their pension policy actually means. Who can blame them? It’s not written in plain English.

This lack of clarity has contributed to the rise in distrust people feel for financial institutions, and the issue is global in nature. In many countries, the language of pensions is confusing. The same is true in the United States.

What are your benefits? What is an annuity? How does a 401k work?. We need simplification! And so do governments, if they don’t want to be left to provide for a population that hasn’t got the money to retire.

Readability age is always less than you think

What we have here is a language mismatch – pure and simple. The US Census Bureau tells us that just 12% of American adults have an advanced degree (meaning Masters or beyond). But that’s the reading level at which many policies are written.

This means a staggering 88% of adults cannot easily understand what these policies say!

Don’t believe me? Let’s take some sample text from the Pension Benefit Guaranty Corporation. This is a US government agency, catering for all US citizens. If we take some sample text from its “About PBGC”, we can see how they communicate.

This is the very first paragraph from that section.

Pension 1

NOTE: We used VisibleThread Readability for our analysis. It’s a lightweight readability tool for Doc, Web and Text analysis.

Only university educated citizens need apply!

Grade 15 means that readers need 15 years of education to easily understand this content. This requires a bachelors degree. In the US, 67% of people above 25 do not hold a bachelors degree.

Something is wrong. Pension providers and government agencies are completely missing the mark. They produce content that excludes a majority of the intended audience.

In our example, the PBGC uses very long sentences, an adverb and the passive voice all in one paragraph. This translates to a poor readability score. You need a university education to understand it – and that’s before we even get to the policies themselves.

Let’s see how we can fix this language.

Pension 2

Let’s fix it

With our changes, readability is still is not ideal but at least we have brought the text down to a high school reading level. This is a lot more favourable for people in the US who are relying on the PBGC and similar agencies. They need plain language and clear information to make informed decisions on pensions. We all do – to ensure we understand where our money is going.

Here’s another example of a poorly-worded explanation. This time the PBGC is explaining the difference between an annuity and a lump-sum payment.

Pension 3

Again, you need a university education to understand this definition. We have a long sentence and the passive voice. Two red flags. The writing should be simpler than this. Let’s have a try.

Pension 4

We can see how easy it is to improve this text. After our changes, the text is clearer and more concise. We have taken the reading level down by five grades. Many more people can now understand it. The benchmark for clear language should be a Grade 8 reading level, and a readability score of 50.

Here’s what pension providers have to do

Pension providers have to overhaul their communications.

  • Cut out the long sentences
  • Stop using the passive voice
  • Use simpler words
  • Eliminate all jargon
  • Explain technical terms in clear English

The language of pensions is too important for society. We all deserve much better. Just because people aren’t educated to a certain level doesn’t mean they should be excluded. But that is exactly what’s happening.


  1. Pensions are critical, but explanations are too complex.
  2. The pension industry must clarify their message or people will be underfunded in retirement.
  3. It’s relatively easy to fix using shorter sentences, active voice and simpler language.
  4. You can easily score content for plain language by using tools like VisibleThread Readability. These tools provide instant reports on problematic content and suggest fixes.


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