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Nest Insight 2023
On Thursday 6 July we brought together academics, policy-makers and senior industry figures to discuss themes related to our mission: to find ways to support low- and moderate-income workers to be financially secure, both today and into retirement. At this year’s Nest Insight conference, we wanted to stimulate a critical discussion about the future of the UK’s auto enrolment policy.
Panel session | Watch session
A growing number of employers are considering the role they could play in supporting their employees’ financial wellbeing. Several products are on offer to address the low levels of financial resilience amongst UK workers. Options including payroll saving, earned wage access and loans are available from a range of different providers, and some employers are building their own solutions. During this panel discussion, we will step back to consider questions including what are the most pressing financial needs that low- to moderate-income workers have? What are the opportunities for employers to support their workers? What does a good financial wellbeing provision look like, and how effective are the solutions on offer? Nest Insight will share some learnings from recent research supported by JPMorgan Chase looking specifically at earned wage access and employer sponsored loans.
- Introduction: Stephanie Mestrallet, JP Morgan Chase Foundation
- Moderator: Sarah O’Connor, the Financial Times (FT)
- Sope Otulana, Nest Insight
- Sam O’Sullivan, Chartered Institute of Payroll Professionals (CIPP)
- Matt Day, John Lewis
Panel session | Watch session
Supporting people to secure an adequate income in retirement is the number one priority for the pensions industry. Yet, many of the traditional ways to measure an individual’s financial preparedness for retirement ignore a significant potential cost: housing. Patterns of home ownership in the UK are changing, and many more people in future generations will either be renting or paying mortgages into and through retirement, so the traditional assumption in adequacy models that housing costs in retirement fall to zero is surely not sustainable. What does this mean for pensions policy and for the industry? Is it just another reason to call for higher contributions, or do we need to think more innovatively about the role we can play in supporting people on the path to home ownership? In this panel we will discuss issues relating to the measurement of adequacy in relation to housing costs, and start to discuss the potential for, and challenges relating to, innovations within pension system design that could help solve the challenge.
- Moderator: Karen Barker, abrdn Financial Fairness Trust (AFFT)
- Liz Fernando, Nest
- Paul Cullum, Frontier Economics
- Damon Hopkins, Broadstone
Keynote speech | Watch session
Changes in pension systems around the world mean that, increasingly, the onus falls on individuals to work out how much they should be saving for the long term. In the UK, considerable thought has gone into the question of how much any given individual should save to be confident of a retirement income that’s high enough to support their consumption needs in later life. Yet this ‘adequacy’ question is generally framed in narrow pensions terms, without considering the short- and medium-term impact that increased retirement contributions might make on the household balance sheet. With living costs on the rise, it’s far from easy for a household to balance short-term needs with long-term savings goals. And their consumption needs in retirement will in part depend on the choices they may make today. Given the complex interactions between present and future financial health, how can industry and policy-makers help people make informed choices about how they allocate limited assets? Is it possible to develop a more nuanced view of an ‘adequate’ level of savings, that takes into account the household’s total financial position, today and into the future?
- Moderator: Matthew Blakstad, Nest Insight
- Taha Choukhmane, MIT Sloan School of Management
Pensions auto enrolment has been a huge success in the UK, leading to a focus on how to build on that success. For many, this is about expanding both coverage and minimum contribution rates within the current framework. But a lot has changed in people’s financial lives since the auto enrolment policy was first designed 15 years ago. More pension saving, as traditionally understood, might not always be the best next step for some of those benefitting from that policy. Developments in similar systems globally have focused on how the ‘plumbing’ of the workplace pensions systems can be expanded to support people in building more holistic financial wellbeing – for example with the incorporation of emergency savings and student debt repayment elements into recent retirement reforms in the US.
Our seventh annual conference focussed on some of the broader themes around financial behaviour and financial wellbeing, the different goals that workers are trying to balance and how they can be supported, and the critical role that the workplace has to play. We also asked what this means for how we think about the next iteration of auto enrolment policy and pension system and product design in the UK.