Are employers buying workplace pensions on value or price?


We have started an interesting project looking at the reasons given for choosing a workplace pension. Our sample is those employers who have used ‘s “choose a pension” tool.

For those who don’t know- the tool analyses data input by employers and rates the offering of up to 20 providers of workplace pensions , against their profiles.

The propositions of the pension providers are presented in order of merit, the most attractive having the highest score and the least attractive the lowest.

The scores are generated using 6 metrics that focus on value for money, inter-operability and member functionality.

Around 85% of those using our system choose our top-rated provider. The remaining choices are made out of personal preference and presumably a view that their preferred provider scored well enough.

Every employer, before completing the process, has to input the reason why they chose the provider they did. This “reason why” statement is documented in what we call the “actuarial certificate” that is distributed to members (and also future-proofs the employer).

The reasons why are unique to the employer and (as employers use our system only once) show a high level of engagement. Taken together we are seeing trends in choice that help us better understand what drives employers – this informs our ratings and the default weightings we give to each of our 6 metrics.

We are quite excited by this exploration of the decision making, not least because most of the decision makers will not have taken such a decision on behalf of others before. We are charting how a mass market of business purchasers are behaving and we expect the results of our work will be of considerable interest to the industry.

We won’t be publishing our findings for a couple of months- and we intend to repeat this process regularly as we see the uptick in employer numbers from 2016 onwards.

What is already clear is that decisions are not being taken on headline price. We have seen only a handful of “reasons why” in which (low) price is stated as the primary reason for purchase.

The pricing metric (the “money” in the value for money equation) has been reducing in importance in our default weighting of the six metrics. This is partly because of the “reasons why” but also responding to the behaviour of sophisticated users who are adjusting the weighting of the metric according to personal conviction.

We are seeing a consistent trend in these bespoke weightings away from a high weighting towards price in favour of an emphasis on investment value and interoperability (the capacity of the provider to deal with the employer’s payroll and HR interfaces.

It is too early for us to speak with authority. But the evidence we are collecting suggests that our sample, albeit a sample of more conscientious employers (this service is not free), are more concerned with value for money than headline price.

The implication seems to be that where engagement occurs, the quality of decision making is more sophisticated, whether this equates to “better buying” is another thing.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Are employers buying workplace pensions on value or price?

  1. Con Keating says:

    The immortal line: “He would say that, wouldn’t he?” comes to mind

  2. henry tapper says:

    Well indeed “he” would.

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