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Superannuation: Mind your language

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Cite as: November 2011 85(11) LIJ, p.81

Jargon can be a barrier to a healthy retirement.

Research shows members of super funds are often baffled by the use of financial jargon. A recent survey by the industry indicated that one in three people did not know the definitions of key superannuation terms, and women were more likely than men to be confused by industry jargon.

While the financial services industry uses technical language to inform and explain important concepts, products and services, it often only serves to do the opposite. It can sometimes feel like a formal qualification in finance is required to understand the jargon.

There are many examples of superannuation jargon and it is no surprise that most publications issued by super funds and their websites now come with a glossary. For those whose working days are not spent in the financial services industry some phrases can be hard to understand and can often baffle. Take, for example, “CGT exempt component”, “concessional contributions”, and “restricted non-preserved benefits”. Some other phrases may sound familiar but their precise meaning can still escape one’s grasp. Take, for example, “lost members” and “preserved benefits”.

Jargon in any field of knowledge is a barrier to lay people trying to understand that field. This is a serious problem when the stakes are high, as is the case with superannuation. Mistakes with your superannuation can cost you money. For example, not understanding superannuation means money can be lost through penalties for breaking the rules, opportunities not taken, not managing your super, or making the wrong decisions because you simply didn’t know a decision was needed or indeed how to make it.

Also, the intangibility of superannuation concepts, and their changeability as superannuation rules have been modified by successive governments, have exacerbated the problem.

The superannuation industry may have something to learn from the legal industry’s growing interest in turning legal jargon into plain English, and the federal government is taking some steps to make improvements in this area. Soon, super funds will be required to shorten the length of documents that describe superannuation products – for example, the Product Disclosure Statement. In doing so they would be required to make shorter, plain-English descriptions of products instead of the current long and highly technical and detailed depictions.

In summary, the super industry needs to do more to demystify super. This requires a commitment and the resources to transpose technical information into simple words and sentences.

Super funds also need to use different media to help members with the jargon. Increasingly, funds include short videos on their websites to report on performance or explain particular aspects. Funds now have calculators on their websites so members can get more information about their position – answers to questions such as “how much money should I save to have a certain amount on my retirement?”.

Motivation is the key here and I believe one strong motivation is the goodwill that funds would derive from their members by removing jargon and simplifying the language. Further, removing jargon will help with a key retirement saving issue, whereby many Australians will not retire with enough money to maintain their expected quality of life through the years spent in retirement. By demystifying super, super funds will help their members better understand super so that they can ensure their savings plan delivers a lifestyle in retirement that meets their particular objectives.

In the end, the super industry needs to start talking in the language of its members.

Andrew Proebstl is chief executive of legalsuper, Australia’s industry super fund for the legal profession. He can be contacted on ph 03 9602 0101 or via


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