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Almost three quarters (73 per cent) of retirees do not fully understand key pension terms such as 'annuity', with pension jargon seen as a “barrier” to pension planning, research from Legal and General (L&G) has found.
The survey, conducted amongst retirees aged 45 to 75+, found that the majority (80 per cent) of retirees did not fully understand the term defined benefit (DB) scheme and 82 per cent did not fully understand the term defined contribution (DC) scheme.
Meanwhile, almost three in 10 retirees (29 per cent) do not fully understand basic terms like state pension.
Additionally, around one in five (22 per cent) stated that complicated terminology was an obstacle to researching pension plan options.
The research pointed out that this issue was more common among people in their 40s and 50s taking early retirement, who reported they were most confused about complex jargon and an overload of information.
Commenting on the findings, Sheffield University professor of economics Alberto Montagnoli said that a good understanding of pension terms was “vital” to a secure financial future.
“It’s worrying to see that financial terms are misunderstood,” he said.
“This could potentially lead to individuals failing to plan appropriately for their retirement. We need to make financial language easier for everyone to understand.”
If you’re confused by the terminology associated with the various retirement options, and unsure which option would be best for you, Wealth of Advice can help. We offer a wide range of impartial advice, always tailored to the individual client’s needs and circumstances, and explained in a clear, jargon-free way that makes it easy to understand.
For a free copy of our guide Understanding Your Retirement Options, visit https://www.wealthofadvice.co.uk/financial-guides/retirement-options-guide
Alternatively, contact us for a free, no-obligation consultation. Tel. 0191 384 1008 or email enquiries@wealthofadvice.co.uk
If you want a better view of what your future could be, we'll have a chat over a cup of coffee in our Durham office and work out if we can add any value to your financial picture.
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