SEI discovers their “DC pensions” don’t make sense – time for a change?


SEI – the upmarket mastertrust owned by an American multi-manager is keen to find out more about what their members think.  It’s commissioned our old friends Ignition House , headed by Jannette Weir to tell them.

Steve Charlton , its CEO has set Ignition House a tricky exam question.

“How do you get people to own their pension?”.

I asked myself ….”Do I own my pension?”

I do “own” my pension I get from my occupational pension scheme. Each month I get a transfer into my account of an amount that is fixed till my next pension pay rise. I know how each part of the income I get increases and know how it interacts with the state pension. I also know my forecasted state pension and how much of it will be paid by my occupational pension scheme and how much by the state. When I talk to other pensioners, I am always surprised by how much they know about their pension and how they “own” their rights to each penny that arrives in their account.

I also have a DC pension pot but have quite a different relationship with it. Each time I get my online valuation, I anticipate the new value with apprehension. Sometimes I am pleased as the value has gone up and sometimes I sigh, as I see I have lost money. In 2022 I lost more money from my DC pot than I earned. I do not relate to this pot as an “owned” pension, it is not giving me any pleasure, it is giving me the collywobbles.

So when I read in Steve Charlton’s introduction to SEI’s report “Creating an ownership mindset with DC members” – the statement

Retirement savers don’t feel fundamental ‘ownership’ of their financial retirement future. We believe this should change.

  • I got interested.

The report that has come out of Ignition House’s research starts well

That sounds about right. I have considerably less confidence in how I can get at money from my pension than from any other part of my finances. I have easy access to shares, ISA and money in the banks but any decision I want to make on my pension flashes up “you should consider speaking to a financial adviser, meeting with Pension Wise or talking with Pension Helper“. Everyone seems to have control of my money but me.

I agree with the report – “ownership” is about “control” , “accountability” and “responsibility”. The people that Jannette Kaye and her team spoke to were clearly responsible and deeply grateful to be in a workplace pension but they had none of the attributes of ownership

Up and till about page 7 of this report, I was nodding my head in agreement but then things started going wrong. I found myself in the usual position of being considered a financial ignoramus because I happen to have a six figure pension pot and really don’t have a clue. One of the reports further findings was that

Although the propensity to take ownership does
increase with pot size, worryingly 44% of those with
more than £100k in their pots reported low ownership

Is it worrying that people with a relatively large pot don’t feel they own the problems that the pot brings them, or is it worrying that there isn’t some magic number that activates our “inner CIO?”. Frankly , I could have £10m in my pot and I don’t think I’d “own it“.

I was much more taken by this comment – which I suspect made Jannette laugh. The spirit of Victoria Wood is alive and kicking…

‘My first job out of uni was in a supermarket. I remember getting a letter, and it said something like, ‘You will have X amount at the end of your pension’.

And all I could think was, well, hope I’m not in this job.

And I haven’t really thought about it since’. Woman, age 32

One of the things that pensions don’t have – is a sense of humour.

Here’s another “women age 32” (or it could be the same one as there’s more good sense here).

But do I really understand exactly how much my employer is putting in and exactly how that company’s investing it? What rate of return I’m getting? No, I feel blind to all that. And there’s almost nobody I can touch to say, ‘Hey, explain what you are doing with my investment’. It feels like there’s nobody there’. Woman, age 32

What she gets instead is nudges to save more, spend less, videos embedded in her pension statements and homilies on the PLSA’s retirement living standards. SEI are playing all the right notes – but for the woman age 32, not necessarily in the right order.

Listen carefully to what Woman, age 32 wants. She wants to know the rate of return she’s getting (and presumably to work out whether she’s doing well or not). She wants to know whether SEI are making her money. There’s nobody telling her that. But there appears to be “cloth-ears” at the other end, as SEI keep talking about “how pensions work” and repeating “onboarding information” as if all that matters are the features of the pension product. What woman of 32 wants to know is how her pension is “working” – she wants to know if she’s getting value for her money.

There exists alongside Women of 32, a cohort of connected couples. I got confused because sometimes these paradigms of connectivity were  Charlie and Claire

But at other times , Charlie had become Colin

Whether Colin or Charlie, they and Claire are the smug pension know it alls who have answers to questions woman of 32 probably never thought of, they are the report’s heroes

They like to feel they are in control and taking responsibility, they do not see pensions as a tax, and very firmly see pensions as their money.

So the task that the exam questions sets us is about financial cleansing  so that more of us can be Claires and Colins/Charlies. This would make a very pleasant client base for SEI but I suspect an insufferable world for the rest of us.

So SEI conclude they should spend less time preaching to the converted and more time bothering Woman Age 32 and her like

To create the emotional responses needed to drive ownership amongst the other groups, we believe schemes will need to take a segmented approach. Identifying the mix of personas in their membership base can enable schemes to design appropriate
messages, targeted at what matters to their members

Be warned – if you can’t be bothered to get connected , SEI are going to be picking on you, no matter how much you’d like to be left alone and despite the fact you’ve no intention of changing your behavior.

In our depth discussions, a respondent’s lack of ownership was often prefaced by some notion of regret. There was often an element of embarrassment, or an apology to the moderator that they did not know more. However, despite these expressions of concern about their lack of understanding, and about whether they were paying enough, this feeling alone was not enough to tip them into finding out more today.

I’m afraid the final part of the report degenerates into sections that repeat the same platitudinous solutions that providers have been churning out for decades. Maybe an app, maybe a conversation with a real human being etc..

Where there is an authentic voice it is from a belligerent woman (this time of 53) who tells the interviewer she was pissed off to hear that she hadn’t been saving enough. All the women of 53 wants is to be pay her fare , get on a plane and arrive at the destination (like Dave in yesterday’s blog on Wombat airways)

But enough for what? There is nothing in this report that suggests just what SEI or any other master trust is offering as a pension (other than an annuity). If woman of 53 feels she’s had the wool pulled over her eyes on contributions, she’s going to be absolutely furious to find out that all that’s waiting for her when she “gets to the end of her pension” is a quartet of investment pathways.

Diagram courtesy of TPT Retirement Solutions

Confused by “contributions” (try salary exchange) , confused by tax-relief (net pay v RAS), confused by “Growth in investment returns- (no personal information) and then confused at retirement (the end of the pension) which gives four options , none of which are called pension. This is how counter-intuitive the DC pension is – most people don’t own it – because they don’t understand it. The only thing that is certain is that 25% of the pot is tax-free (at some point).

For a time , the report puts forward some ways to convert woman of 32 and 53 into Colins. Charlies and Claires. Get Pension Wise in (as Tesco did), get smart pension apps (as SEI do) , give people pension dashboards (SEI already have),ESG (as Tumelo already does).

And then – inexplicably- the report that has been rattling on about apps and Pension Wise in the workforce and Pension Dashboards, just gives up

Just one in 10 of our disconnected groups felt that
it was realistic to expect them to take ownership—
reinforcing the need for strong defaults.

Report over then!

But what is meant by strong defaults is not made clear. Though the report is keen on Colins and Charlies and Claire’s , it has no answers for the 9/10 of respondents who are Women Age 32 or 53. The reality is that “do it for me” and “do it with me” are the same thing, with slightly different explanations of what’s being done to you.

Thoughts on ownership

The word “tangibility” appears several times in this report. But pensions aren’t tangible – you can’t touch them, you can only benefit from their payment into your bank account. What pensions can buy you can be tangible.

People have no way of linking what’s in the pot to the kind of things a pot can buy because it is so hard to understand a pot as a pension. People are told they are buying a pension with their savings and is it surprising that they are non-plussed when they are left with a pot.

Instead of getting people to own something they cannot understand, why don’t we create something that people do understand – like a wage for the rest or our lives?

And when savers ask questions like “how am I doing”, please don’t fob them off with platitudinous value for money statements. Instead – let’s tell people the return they’re getting on their money as well as they should be getting (the market return).

Much as I admire and enjoy Jannette Weir’s reports, they have no use if they do not lead beyond the frustration of savers interviewed about their pensions. Sooner or later , women aged 32, women aged 53 and other interviewees will want to do more than talk, they will want to spend and it’s time that SEI came up with a “done for” their customers “pension”.

And for the professional reader, there is only so much we can learn from the frustrations of the people we serve. If we haven’t got the message by now – we never will.

It is time for a change, we need these pots to turn to pensions, we need to give people information not just about how their pots are doing but what they are expected to buy as a lifetime income, we need people to understand the risks we’re making them take and most of all , we need to level with people that for most of them, the amount they are saving is not going to give them a pension that allows them to stop working.

Kidding people that they can retire on their workplace pension is fundamentally dishonest, people don’t and won’t own that.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , . Bookmark the permalink.

Leave a Reply