Blog: Lost in translation

Mark Lisle, compliance manager at Rowanmoor Pensions, on cutting through financial services jargon

It is rare that the family sits down and watches a movie together (even rarer that such offering is in French, with subtitles for the hard of Gallic), but we greatly enjoyed a film called Micmacs at the weekend.

A surreal piece from the director of the better-known Amelie, the film is an entertaining study of the little man exacting revenge on the system. One of the characters, Remington, speaks only in idioms.

Accused, as we are in financial services, of being the ultimate purveyors of jargon, this struck a chord with me.

Charged with ensuring our communications are fair, clear and not misleading, I recognised some of the platitudes (even allowing for loss in translation) that Remington relied upon from the world of copywriting.

However, some examples of jargon are unique to the world of financial services, and particularly pensions.

Whatever happened to the spawn of RU43, the good old 'reasons why' letter? It became a suitability letter, and then a suitability report. Turn your back and tax-free cash becomes a pension commencement lump sum.

Some nomenclature has certainly been en vogue, and had its day, like the now inconceivably extinct acronyms MIRAS and LAPR. But the bête noir of the moment is salary exchange.

In the quirky natural selection process of the pensions oeuvre, what will become of what we used to know as salary sacrifice if the Chancellor’s announcement in the Budget results in the demise of National Insurance (NI)?

With proposals on the drawing board to consult on the merging of NI and Income Tax, salary sacrifice, the staple of the money purchase pension, can be added to the endangered species list.

Even without the possible benefit of reduced employer NI added to the personal pension pot, the added incentive of tax relief at a rate of 32% should make for a positive windfall for the employee benefits adviser, particularly with the prospect of the advent of NEST compelling employers to act.

It could be, of course, that the upshot of the recent announcement will be to focus Treasury thoughts on further ways to restrict the incentives to create a pension fund for retirement. With all that uncapped employer NI to replace, what might the strategy of the Exchequer be?

To take a leaf from Remington’s book: beware the law of unintended consequences. I fear the road to hell is paved with good intentions.