A rose by any other name …

28th June, 2021

  • If the events of 2020-21 have taught us anything it’s that there are no guarantees in life. Nothing is certain, except, as Benjamin Franklin said, ‘death and taxes’. So, in the absence of a crystal ball, life is essentially filled with estimates, guesswork and assumptions.

    In the pensions industry, when working out the funding of defined benefits, we know there is an obligation to pay benefits to members at some point in the future, but exactly when these will be paid and how much they will cost, is uncertain. So, making use of assumptions is widespread. We assume rates of investment return, mortality, salary increases, forecasts of economic growth and price inflation. And we use these assumptions for valuation purposes, as well as for setting factors for early and late retirement calculations and for cash commutation.  Have we ever stopped and considered whether our broad assumptions on proportions married, age difference and gender remain appropriate?  In many cases they probably do but for some schemes these generalisations might be just that and we might be missing important details about our scheme membership.

    Many of these assumptions are necessary and valid. But when it comes to issues of inclusivity, making blanket demographic assumptions, particularly in relation to member factors which impact the benefits payable, might mean that the pensions industry is guilty of being non-inclusive.

    … would smell as sweet

    When drafting member communications, it matters that schemes take the time to ensure that the language used is inclusive. For example, being alert to the use of gendered language such as chairman and mankind, or if illustrating a calculation of someone retiring at a certain age, ensuring the person in the example isn’t gender-specific.

    By making assumptions about the demographic of our membership, we run the risk that some of our members do not fully understand the benefits available to them and their beneficiaries. If we use the word ‘spouse’ in member communications, and assume it includes civil partners without explicitly saying so, we cannot in true faith believe that our communications are providing clarity and understanding to all members.

    Is the pensions industry behind the curve when it comes to full inclusivity? It most certainly is if administration systems are not set up to give members the flexibility to tell trustees what gender pronoun they want to go by.

    And, when members are securing benefits with their defined contribution funds, are we always making it easy for them provide a pension to a partner of their choice? What about the situation where that partner is transgender? Which box does the member tick?

    Or, where a member calls the administration helpline, is the representative trained to ensure that they don’t misgender the member/dependent when speaking to them?

    Nothing can come of nothing

    Love and marriage may once have gone together like a horse and carriage, but pretty soon we’ll be all be driving electric cars (or they’ll be driving us!). We may be tired of hearing about the ‘new normal’, but change is now a constant in our lives, so it’s always time to rethink the old norms.

    If there’s a pensions industry standard assumption that marriage is to someone of the opposite sex, it needs a rethink – starting with the language we use in member communications, looking at factors and transfer values, and considering our whole approach to inclusivity.  

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    • Published byJudith Fish

      Judith is a qualified actuary with over 20 years post qualification experience She is an Accredited Professional Trustee, based in the London office, who works on a range of different schemes. She believes that good governance and collaborative working results in...

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