‘Generation default’

8th December, 2020

  • As an employee, why would I need to engage with my workplace pension?

    I am automatically enrolled, with an investment fund selected for me, all of which is overseen by either a board of Trustees or an Independent Governance Committee, with one of two very competent regulators sitting above them.

    This group of pensions professionals know way more than I do about pensions; surely, any involvement I have will only mess things up. A little knowledge is a dangerous thing, right?

    Well, as your pension is deferred pay, let’s take a similar approach with your monthly salary. We’ll default your mobile, Wi-Fi and TV arrangements. We can buy in bulk, so it’ll be cheaper and you won’t need to think about it. You can have a default car, weekly food shop, veterinary practice and season ticket to Harlequins.

    Oh, you don’t want that? You’d prefer to select your own mobile, Wi-Fi, TV subscription, car and food shop? I’m not big on the marmite either, but surely the mobile, Wi-Fi and TV companies know far more about their subjects than you do? I see you would also prefer Five Star in your Spotify playlist than Five Finger Death Punch, but good to hear that your happy with the Harlequins selection.

    Have you completed your Expression of Wish form? No. Well, we could just default any benefits to the Danebury Metal Detecting Club. I just need your signature here. Oh, you’d prefer an equal split between your sister, step brother and Aunty Mavis? Just as well we sacrificed your salary into your pension or you would have missed out on that too.

    So what would you like to do when you retire? What does retirement look like and how are you going to pay for it?

    I see your plan to marry money, win the lottery or be invited on to Bake Off hasn’t worked out yet. Well there’s always time, but what’s the contingency plan? Hope for the best, plan for the worst.

    I do like your plan to spend time in retirement on environmental projects. Did you know that you don’t have to wait until retirement to start doing that? You can use your pension to invest in funds that incorporate this activity. The Trustees or the Independent Governance Committee don’t know this is what you specifically want to do. They may incorporate some aspects of this in the default arrangement, but you have the ability to do more yourself.

    So your pension does fit into your equation, but you haven’t looked to your SMPI and you have no idea where your money is invested. Oh, you have a very friendly adviser who called you out of the blue and is dealing with all of this for you. And free of charge; how very charitable.

    Let me introduce you to Suzie the ‘pension scams’ Scorpion. Don’t worry about the broken cup; I’ll clean the spilt tea up with this cloth. Oh, you do look a little pale.

    Are you still feeling confident that not engaging with your workplace pension is the right approach?

    Not if you want a workplace pension that works for you!

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    • Published byPaul Tinslay

      Paul is a Professional Trustee for DB and DC Pension Schemes, including Chair for Sole Trustee positions, and EGLAS arrangements. With 33 years in the Life and Pensions Industry, Paul has the very rare, if not unique experience of having...

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