Introduction

Laura Myers

LCP Partner

It was great to be back in person at this year’s DC and Financial Wellbeing Conference and to be joined by so many people both in the room and online, where we spent the morning ‘Walking in their shoes’ – our members and employees.

"In order to fully focus on the outcomes of DC savers, we need to truly understand their issues and concerns from their perspective."
Laura Myers

Head of DC

As an industry, our focus should always be on the outcomes of DC savers, but in order to do this fully, we really need to understand the issues they are facing from their perspective.

Our sessions, which are available on demand looked at the difficult questions our members and employees face throughout their saving journey in what, for so many, are very difficult times: Prices are rising. Energy costs are soaring. Making ends meet is becoming harder day by day.

Taking a step back and thinking about the challenges people are facing and the questions they’re asking, enables us as an industry to think about how we can help and ensure that our people can cope with the day to day and that in the future, they can have a good retirement.

For some, pensions savings are just not an immediate priority. For many, even saving for that emergency repair or for their near future plans can feel out of reach. As our DC savers move towards their retirement, the challenges they typically face such as engaging with their pension, understanding the complicated retirement options, and balancing the conflicting priorities of living now versus saving for the future - all feel even harder.

We all know that thinking about your pension arrangements can be a daunting prospect at the best of times, but with millions of people set to be worse off this year, with some estimating that overall inflation in the UK could possibly even pass 10% at some point soon, it’s totally understandable that people will be focusing on the near term rather than looking ahead to where they’ll be in one, two, or for some, five decades time.

This is an unprecedented time for savers, with DC pensions only really becoming mainstream in the 90s and many DC schemes being younger than that, along with auto-enrolment only being established a decade ago now, this is the first time that many have felt the impacts of inflation and the cost of living squeeze it’s having.

But inflation doesn’t just impact prices now, it also erodes long term savings, and consequently people’s quality of life in the future. Many of our members may know the impact of inflation on their shopping prices as it increases week by week, but fewer will understand inflation’s impact on their pension investments.

Hard investment decisions aren’t the only thing our members have to contend with. What to contribute to a pension, when to access it and the attraction of tax-free cash will all come under scrutiny if you are deciding between eating now or eating tomorrow - it’s easy to see how, for some, pensions savings will go lower down the priority list. So, we need to ensure that members and employees make informed choices.

Whilst the current situation with rising prices and volatile markets has brought political and economic risk to the forefront of our minds, we have to remember the other key risks haven’t gone away: from making retirement decisions to the impact of climate risk on saving.

As well as the immediate pressures members are facing, we explored the varying range of outcomes from master trusts, if annuities could make a comeback and we also looked at what members need to know, and actually want to know, about the carbon footprint and ESG impact of their pension savings. I hope the sessions help you to put yourselves in the shoes of our savers and think about how we can make this road to retirement better.

I thoroughly enjoyed the conference and hearing from all of our experts, along with listening to thoughts, observations and questions from the audience. We hope you did too. Please do take a look at the articles in this magazine and watch the sessions at a time that suits you. And please do get in touch if there is anything you’d like to discuss.

Laura Myers

Our conference opened with a session on what our members want from investment strategies, specifically, ‘’Does my employer consider my point of view when setting investment strategies?” We were joined by Amy de Baat, Head of group pensions at Tesco, and Stephen Budge, Head of DC investment strategy at LCP. They took us through the journey of designing Tesco’s DC investment strategy with their colleagues in mind and how they considered their colleagues’ priorities whilst significantly improving the outcomes for Tesco’s DC savers.

In his session, Paul Gibney, LCP’s author of Marco, markets and more, explored the worries of inflation and what we can do to help our members’ savings over the long term.

In Heidi Allen’s session she uses her experience as Head of Financial Wellbeing at LCP to explain how employers can help employees’ financial concerns and education so that employees can take control – with both benefits for the employees' financial wellbeing and the Company’s bottom line.

Often human decision-making can be irrational. Zoe Burdo’s session discusses the psychology of our decision making and what we can do to help us all make and understand these hard choices.

Will all DC savers get the same retirement outcomes? To help us illustrate the variation in the DC market LCP’s Nigel Dunn, our lead researcher on master trust default strategies, focused on the investment offerings of master trusts, how they vary and what to consider whether you use MTs as a benchmark for your scheme or if you use or are considering using a master trust.

Next we focussed on climate risk and in particular how we get to net zero and if we as pension schemes are making those commitments, how do we communicate about them and bring our DC savers on the journey with us? Helen Shackleford, partner in our DC department and Hayely Williams, partner in our communication department provided top tips on the road to 2050.

As we move through thinking about the issues our members face in their savings journey, at some point for all savers they will take the decision about what to do at retirement - something we all appreciate is a truly complex decision - so how can we make it better? Sir Steve Webb took to the stage to share his thoughts and recent research he’s undertaken on this topic.

Complex decisions are even harder to make in a world lacking in trust where you have to be sceptical of information you see and read. To round-off the conference, we heard from our key note speaker Nina Shick, an expert in synthetic media, disinformation and cybersecurity, who shared insights on the many influences affecting decision making as she covers the topic “Can I believe what I read?” In an age of AI and Deepfakes.

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