Lots of people in the pensions industry could tell you the purpose of a workplace scheme. But not everyone agrees. Why is that?
If you asked most people in the industry: ‘what’s the purpose of your pension scheme?’, they’d probably say something like:
- for DB, ‘to pay members the benefits they’re due’
- for DC, ‘to help members get a more comfortable retirement’
But there are plenty of players who say the purpose is bigger, different or more complicated.
For DB, if you’ve got a surplus, should that be used to increase benefits, for members or current employees or both? And to what extent should the trustees guide members to make good decisions, especially when they retire?
For DC, should we have much stronger defaults that make it less likely that members will make bad decisions, like opting out or buying a Ferrari? After all, what’s the point of building a bigger pension pot if you spend it badly?
And for all pensions, should investments be helping secure the future of our species, not just our members? After all, what’s the point of retiring into a world that’s on fire?
Do we need a new purpose, a new definition?
Or just some flexibility?
Or is everything just fine?
If you’re doing the same, we’d love to hear from you.