Young people find pensions jargon tougher to interpret than a foreign language
Millions of people aged 20-29 cannot get their head around pensions jargon but can understand a foreign language, new research has revealed.
prepaid cardNearly a quarter of young people were able to translate simple French, Spanish and German phrases while less than one in 10 understood the precise meaning of basic pension terms.
A third knew the exact meaning of the French for “how old are you?” while one in five understood the German for “what is your name” and one in six the meaning of “how are you” in Spanish.
The news comes just before the first group of UK workers are automatically enrolled onto workplace pension schemes – but just one in 14 young people understood the exact meaning of the phrase auto-enrolment.
MRM director Michael Taggart said: “On the one hand, auto-enrolment will soon mean all young workers will have a workplace pension, but without knowledge and understanding they might fail to see the benefits and opt out.”
The research, which was carried out for the Young Money report by financial services consultancy MRM, also found that just one in 10 of those aged 20-29 could describe the exact meaning of the terms annuity and final salary pension.
Katie Morley from trade magazine Pensions Week also sat on the panel for the Young Money report and suggested that introducing ‘real life’ financial education could rectify the situation.
She said: “It is no surprise that pensions jargon isn't resonating with young people in the UK. The terminology is not actually that complex once you are familiar with it. Mobile phone and computer jargon can seem just as obtuse when you don't know what it means, so tinkering with financial vocabulary probably wouldn't help matters.
“However, the lack of knowledge is severe. It screams of a need for schools to provide 'real life' financial education, and the Government can be blamed for this non-provision thus far.”
Parents whose children may struggle to understand financial jargon might want to consider controlling their spending with a prepaid card. By loading a set amount on a prepaid card, there is no danger of over-spending or acquiring debt.