Workplace pensions lack an objective and are in need of reframing to ensure that savers understand what to expect from the system, SEI managing director, defined contribution, Steve Charlton has argued.

Addressing the PLSA Annual Conference 2024, Charlton pointed to research showing that less than 20 per cent of pension holders felt they had some degree of ownership over their workplace pension.

By comparison, the analysis found that 85 per cent of people identified as having ownership over their ISAs, loans, and debts.

“There was a must closer emotional connection between those things, compared to what we do for a living: Providing workplace pensions,” he continued.

“We tried to get to the bottom of why there was this disconnect, and it came back to that emotional connection.

“There was no decision that members had made in becoming members of workplace pension schemes, and 'therefore it was just sitting in the background and would look after itself, wouldn’t it?'”

Charlton noted that while there was lots of talk about contributions, tax relief, retirement, and savings pots, workplace pensions do not tend to have a stated objective.

If there is a review of auto-enrolment as part of phase two of the government’s Pensions Review, Charlton called for a review into what its objective is.

Furthermore, rather than talking about how people save, their investment options, and what the tax relief system looks like, he argued that workplace pensions should be reframed to get people to talk about what to expect from the pension system.

“So, it’s state plus, but state plus what? We think that would be a must better objective than forever tinkering around the edges,” Charlton stated.

“As an industry, we have consultations about investments, consultations on value for money, and all sorts of other things, and more to come, but what we don’t have it that fundamental review of what we are working with in the first place.

“We think a reframing of the private pension system needs to occur. But we also need that coherent objective, and that coherent objective would also suggest that it needs some longevity to it.

“Whilst we have an opportunity now to change what the system looks like in the future, we also need to give it a time horizon, maybe 15-20 years, which would suggest that it has to have the political tinkering and the belief that our pension system is the magic money tree taken out of it, so we need some sort of duration that people can say: ‘That’s what I’m saving for, these are the reasons why, and this is how long the system is going to stay as it is’.

“We also think the tax relief system needs to be reframed. Simply reframing it into a different terminology.”

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