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Over the past weeks I have been going through the FCA’s Financial Lives Survey and delving into some of the more difficult areas of pensions for ordinary people. I will be publishing shortly an index of the blogs I have written, there are 11 of them of which this is the 11th.

We have achieved what auto-enrolment set out to do, we have given those who were entitled to SERPS an entitlement to a fund which by the time they get to the retirement zone (55+) . This is where the FCA starts its study and it’s where I end it.

Most people have a pot from their retirement saving and most of the people who are enjoying a pension are enjoying a defined benefit. The FCA know who are outside the auto-enrolment system and display them graphically.

There has been since the start of auto-enrolment in 2012 a sense among people over 50 that for the good it will do, saving for a workplace pension is too expensive and that other things will have to do. Many of these are listed below.

The majority of saving for a pension is in “DC pensions”and only a small amount of accrual into DB pensions takes the total saving from 44% (DC) to 58% DB inclusive. The number of DC savers (under auto-enrolment is up from 37% when these surveys started.

We have moved from a mess before 2012 to a relative success 12 years later. At least it is a potential success, provided we can give people pensions as well as the means to save for them, and do so with value for the money.

I am old enough to remember in the 1980s a time before Thatcher’s personal pensions and the opt out of SERPS when an earnings related second pension was the only way most people had to get more than the much less generous state pension we have today. SERPS was torpedoed by the personal pensions and an incentive to “contract out”. This incentive was also available to defined benefit occupational pension schemes.

The failure of Stakeholder Pensions , introduced in the early years of the 21st century was followed by a more thorough review from which auto-enrolment into workplace pensions followed. By 2016 there was sufficient success for auto-enrolment that the Government could close SERPS and while there has been a transition since, we are now beyond its memory for most people.

But SERPS did something that workplace pensions (at least the DC ones) aren’t. SERPS provided a pension based on national insurance paid over time at a certain time at an agreed rate. Nobody understood it (other than GAD and a few private experts) but that didn’t matter, it was efficient and it would have worked well in delivering adequacy. John Shuttleworth, a PWC actuary who understood SERPS described it as the most efficient way of delivering workplace pensions.

What we have now is a funded version of what SERPS set out to do, it is not so efficient as SERPS but it is more efficient than what came before 2012 by way of DC accumulation and it has the capacity to deliver pensions better than annuities (through investment and proper longevity protection provided on a collective basis).

The chaos that the FCA Financial Lives Survey describes, is not about saving but about spending those savings “decumulation”. This horrid word is there to avoid using the word “pension” but most people think they have saved for a pension and they may find they will be defaulting to a pension if they do not want freedom from pensions.

We are 20 years on from the initial commission that set auto-enrolment into funded workplace pensions going. It was a replacement for SERPS and the job is half done. The 2024 FCA Financial Lives survey demonstrates how important it is to get the other half of the job done.