Horizon scanning – Integrated wealth

In the sixth installment of our new blog series, Richard Butcher examines how integrated wealth can affect the saver's perception of pensions as part of a wider financial ecosystem.

Questions for trustees/IGCs to ask:

  • Do we consider the other demands on savers’ cash when framing our messaging?
  • Are your comms attractive when compared against other financial opportunities?
  • How are we supporting financial resilience and so sustainable membership?


In my blog “Up periscope – looking to the horizon” I explained why it’s important to look ahead to anticipate what may be coming and try to work out its impact. If we can work out the impact, we can pre-plan how to create opportunity or mitigate risk.

There are three horizons to look to. The near horizon, which is stuff we’re aware and have a pretty good understanding of; the far horizon, which is stuff we’re aware of but don’t yet fully understand; and over the horizon, which is stuff we’re not aware of but still need to be prepared for.

This blog considers a near horizon item – the saver’s perception of pensions as part of a wider financial ecosystem.

I struggle with the concept that I am a grown-up. Inside, I feel as frivolous and reckless as a 20-year-old. Physically I still try to do what a 20-year-old can do. My body, however, reminds me I’m not 20. Looking around and seeing my kids push into their careers and my friends going grey (or losing their hair) also reminds me I’m not 20. Then there’s the realisation I’ve been working in pensions for more than 35 years. How is that consistent with being 20?

Things have changed a lot in that time. One of those things is the way people see pensions.

Back in the ‘80s most people, if they were in anything, were in a DB scheme and a DB scheme was a unique form of financial product.

You didn’t really join a DB scheme – often you were automatically enrolled. Many times, it was a condition of employment.

You didn’t really save into them – your contributions, if you paid any, were deducted from your pay at source and you didn’t have to do any planning. All you had to do was wait until your normal retirement date and then you were given an income for life.

In other words, they existed as a siloed, stand-alone, concept.

Research by the PLSA in 2016, and common sense, tells us that’s not how pensions are viewed now.

Instead, they exist in the context of short term, medium-term, and long-term financial demands: educational debt and perhaps saving for a deposit for a house, paying a mortgage or rent, consumer debt and flat-screen TVs, holiday savings, rainy day savings, insuring the house, car, and dog, ISAs, and just paying the bills and living. While in practice they always were, pensions are now also perceived to be just one component part of a person’s wider health, wealth, and work.

And yet what hasn’t changed, by and large, is the way we, the industry, think. Or the way we communicate and deliver. We still think of, and deliver, pension saving as if it were a siloed stand-alone concept. And because of this, we are losing ground.

Arsène Wenger was a ground-breaking manager when he was appointed to Arsenal in 1996. He introduced concepts that we consider essential to good football now. Things as simple as the idea that professional athletes shouldn’t survive on a diet of chips, or that beer at halftime possibly wasn’t ideal, or that training like an idiot no matter the impact on your body wasn’t conducive to sustainable fitness. He was a revolutionary but, over time, he stopped thinking differently. The result was that the club lost ground relatively and, eventually, he had to go. Pensions are heading the same way.

We have to think about the way we talk to members – remembering we are competing for their limited supply of cash.

We have to think about the way we present our message – remembering we are in competition with other financial products or options.

We have to think about members’ lack of financial resilience (which has a detrimental impact on long-term membership) and try to find ways of supporting them when times are hard.

We have to think about delivering a pensions dashboard that is consistent (although not necessarily aligned – because pension accounts are not bank accounts) with wider developments in open finance.

Now this sounds like a lecture, but it’s not intended to be. There is much good work being done. AE was a great way to sidestep some of the challenges, Nest’s sidecar ideas are solid, and many companies and providers are working to align ISAs with pensions – but we do all need to get on board with this if we are to deliver on our obligations to members.

We all need to reconnect with our inner 20-year-olds – not just to achieve freedom and physical ambition, but to listen to him or her and to watch how they behave. If we don’t, we run the risk of not just aging but dying.


Summary table

The impact of ignoring the wider financial ecosystem

Short term

The uplift in pension coverage and pension saving driven by AE will slowly fade.


Pension membership will be at a basic level. Excess cash will be used in more interesting and exciting areas.


More people with inadequate pensions (although this may be offset by wealth elsewhere).


Adequacy risk increases.


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