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