Improving financial literacy through simple language and technology

13 Aug 2025

First seen in Money Marketing

The pensions industry is not famed for its accessible language. According to Abrdn, 23.2 million UK adults have poor financial literacy, which can result in a £20,000 gap to their more financially literate counterparts. Terms like “drawdown”, “scheme illustration”, and “annual allowance” regularly alienate ordinary savers, leaving them disengaged and lacking a genuine understanding of their financial situation.

This in turn heightens their risk of poor financial decision making ahead of and at retirement, worsening the chances of a positive experience. To better engage savers and to empower them to make good decisions about their finances, financial literacy must be strengthened from the ground up. But how?

Improving financial literacy through technology

Unfortunately, when it comes to financial literacy, there is no silver bullet. A mixture of approaches must be used to jargon-bust, demystify, and set the stage for a happier, more fruitful retirement.

Technology could be key to effective pensions education. Imagine a world where micro-lessons and handy education-led widgets pop up on screen when viewing your pension, so consumers can have their questions answered in real time. Tools like this can help to map out the road to retirement, so savers better understand their current financial position versus where they need to be to achieve their desired retirement goals.

Currently the main universal touch point for a pension is their mandated annual statement. This may be delivered via the post of electronically. It is, however, a static, jargon filled, bland document that I’ve heard too often ‘isn’t read’. I was pleased to see the Financial Conduct Authority (FCA)’s DP24/3 discussion paper discussing whether rules should change, it’s my opinion that yes, they should. COBS disclosure rules are completely at odds with Consumer Duty and as stated enforce the use of jargon that is so off putting to consumers and is not fit for purpose in a digital age.

Pensions dashboards a chance to offer pensions guidance

The upcoming pensions dashboards represent a generational leap forward, a chance to engage the masses, promising to aggregate savers’ disparate pots and provide a single, accessible view of retirement savings. Access though, won’t deliver engagement alone.

With the dashboard ecosystem mandated for connection by 2026 for the largest schemes, millions face being confronted with an array of figures and unfamiliar terms, risking overwhelming them and, ironically, disengagement. For dashboards to revolutionise engagement, guidance and learning must be built in and around the displayed data to ensure learning and guidance become part of interacting with the technology.

The regulator also has a role to play here. The Financial Conduct Authority (FCA) should change its rules and encourage standard plain language requirements and literacy tools, especially as dashboard view volumes surge. Mandating for simple language ensures the outcome, as opposed to trusting various stakeholders to figure out the easiest way to explain the difference between, say, an annuity and drawdown.

Pensions education in schools and the workplace

While dashboards offer a unique opportunity to address this problem, technology should not be seen as the only way to boost financial literacy. School, too, has a role to play. Teaching basic pensions education early would set the scene for lifelong positive habits, pensions are not about old age, they are about your future when you’re no longer working. Too many people opt not to save into a pension, preferring instead to enjoy the cash today, and likewise many underestimate how much they should be saving for their desired retirement. A report from the Money and Pensions Service in 2023 found that less than half of children (aged 7-17) have received a meaningful financial education, either at home or school. Arm young people with this knowledge early and make way for a future generation positioned better for retirement than ever before.

Employers could also be doing more, and too many assume the buck stops with automatic enrolment. Instead, employers could bolster understanding through short pension webinars or digital explainers using simple dashboards or tools within the workplace. If there is not capacity to do this in-house, third parties can assist. A former employer of mine offered free initial financial advice, I took this up, ironically as I had 5 pensions at the time and wanted to get them all onto my staff scheme.

Financial literacy is a lifelong challenge

Fundamentally, improving financial literacy must be addressed as a lifelong challenge, with pensions education beginning in schools and continuing throughout every stage of life. The FCA’s Consumer Duty legislation requires all regulated firms – including those in the pensions sector – to communicate clearly and ensure that information is easily understandable. These guidelines must be used to assess the impact of regulatory changes (abolishing LTA and then introducing 3 allowances is not making things easier) and when designing communication and digital tools so that they assist and empower consumers when it comes to their retirement savings.

With the dashboard framework only a year from introduction, financial literacy must become an urgent, system wide priority. Pensions should be a language everybody can speak, and dashboards should be created as engines of understanding and action, as opposed to being repositories of jargon and complex data.

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