At first when APG tried to invite me for this little talk they couldn’t get hold of me. Because I automatically threw all the letters they sent me in the wastebasket. That’s what I do with all post from all pension funds, whatever the subject may be – it all goes unread into the wastebasket.
And I’m certainly not the only one who does this. That’s what all Dutch people do with post from pension funds.
Well it’s kind of logical, isn’t it? After all, it’s never good news... About pensions? Everyone in the Netherlands is dead scared about their pensions. I think it’s safe to say that the less you know about your pension the more soundly you sleep.
Unfortunately that’s not what the minister wants. On the contrary, he wants pension funds to give the public better and clearer information about their pensions, how much they are, whether they’ve saved enough and what they can do to make it better. At least that’s what he said in a letter to parliament that came out last month in which the law on pension communication was evaluated.
So the pension funds have been given a virtually impossible task to perform. They have to get through to the public with a message that nobody wants to hear.
So what CAN they do to get Dutch people to read their pension post?
I would say; pension funds, cut out the jargon.
What for example do you make of the words ‘coverage ratio’? That’s a term my father always used on the farm when talking about the performance of Belle Jelle. Belle Jelle was a stud bull, I should point out, and every now and then he had to pay the cows a visit, I’m saying it as nicely as I can, and then a record was kept of how many he’d visited: the current coverage ratio to be precise. And sometimes the farmer was critical of this and then they called it the critical coverage ratio.
All in all not words that should be used by a nice, sober, upstanding pension fund, it seems to me. And to avoid misunderstandings too. Why not just say ‘the money that funds have to keep in cash’, or ‘cash reserve’. I think everyone would get that straight away.
Another term funds use, which I always find very intriguing, is ‘longevity risk’!
Surely if you live long that isn’t a risk? Well, apparently it is for the pension funds. That’s fine if that’s what they think, but it’s not the sort of thing you come straight out with like that surely? For goodness sake, just be a bit normal! It sounds a bit like ‘it would be great for us if you could die as soon as possible, preferably before your retirement date, because then it costs us less’. At least that’s how it seemed to me. Just saying.
And then korting [the Dutch word means both ‘discount’ and ‘cut’]. This too I find a confusing term. When I hear korting I think “Oh, great!” But with pension funds it’s just the opposite, right? So I’d prefer them to say ‘you will get less pension’ or ‘pension reduction’, that would be clear. The same applies to indexation. If like me you aren’t an economist you really don’t know what that is. Call it pension increase.
Or what do you make of ‘invaren’ [meaning to sail into a narrow passage]. Employees’ pension entitlements that you can invaren to the new rules, they’re laid down in the pension agreement. As if it’s about a huge ship that you have to dredge the harbor for.
But that won’t be the case for most people, right? For most people it’ll be no more than a sinking dinghy if you insist on using the term invaren. I would say: transfer. But at a macro-stable discount rate. ‘cause an unstable discount rate is not something you want to be around too long.
And then the damping of the hard luck and good luck generations. You know about that? Whole generations that get damped by the pension funds? Seemed a bit lugubrious to me, but it turns out to be about compensation. It means that generations that haven’t saved much pension money are compensated by the generations that already have billions. Well that’s positive, isn’t it? So I wouldn’t call it damping. But solidarity. Words matter.
Are there any good pension fund jargon words? Yes indeed, there are.
For example I really like ‘sleepers’. They’re the people that don’t move their old pension entitlements to their new fund. It reflects well what these people are: sleepyheads, or better still snorers. People you have to shake to wake up. So the pension funds can continue to use that word, no problem.
Talking about continuing: the pension funds must of course continue come what may. After all it’s great that they're there. And you’d do well to write a bit more often and positively about how great our pension system is. Our pension system is the best in the world. Yes, it’s OK to say it now and then!
Maybe the funds have to start their post with that as standard.
I bet people will actually read it.