We sometimes have a habit of assuming people are sensible. This is brave.
The pensions industry still sometimes designs around a mythical member: rational, engaged, numerate, calm under pressure, and apparently desperate to spend a rainy Tuesday evening comparing retirement income options with a nice cup of tea.
That person does not exist.
Real people are busy, distracted and wonderfully inconsistent:
- they will spend 15 minutes choosing crisps in a meal deal, but ignore a pension statement worth more than their car…
- they will read 93 reviews before buying a toaster, but accept the default pension contribution without blinking…
- they will keep paying for a gym membership they last used when Liz Truss was Prime Minister.
This is not stupidity. It is humanity. It is how we are wired.
And this is why behavioural science matters. Auto-enrolment worked because it stopped trying to turn everyone into a pensions geek/expert and instead accepted a simple truth: people tend to stick with the path in front of them, the path of least resistance. Inertia, usually treated as the enemy of engagement, became the engine of pension saving.
That was not dumbing down. It was good, well considered policy that followed the science.
The problem is we risk forgetting this lesson whenever things get difficult. On adequacy, we still hope people will voluntarily save more because a chart tells them they should. On retirement, we default people for 40 years and then suddenly ask them to become investment strategist, tax planner, economist and Mystic Meg.
It is like giving someone sat nav all the way from London to Glasgow, then switching it off just North of the Watford gap and shouting: “Good luck, empowered consumer!”
More information is not the answer. More choice is not always the answer. A 36-page wake-up pack landing on the doormat is not member engagement. It is a firelighter with regulatory permission.
Behavioural science tells us what we should already know. Timing, framing, defaults, language and trust all matter matters. And people are far more likely to act when the next step is obvious, easy and feels relevant now.
That means policy needs to be designed around real people, not spreadsheet people, and we can’t expect people to think like we do or be ‘experts’. We need fewer dead-end disclosures, more smart prompts, and fewer heroic assumptions about voluntary action. Above all, we need better defaults, better pathways and better guardrails.
And while we’ve made great strides harnessing behavioural science through the introduction of auto enrolment, our industry shouldn’t get too smug. Status quo bias is not just a member problem. Providers have it. Trustees have it. Regulators have it. Policymakers definitely have it. The entire pensions system sometimes behaves like a committee trying to agree where to go for lunch and ending up hungry.
Behavioural science is not a comms trick, nor should it be an afterthought. It should sit at the heart of policy and pensions design.
Whether it is pensions, supermarket layouts, Netflix recommendations, gym memberships or those subscriptions that require a blood sacrifice to cancel, the lesson is the same: design drives behaviour.
Policy sets the rules of the game. Behavioural science tells us how people actually play it.
Ignore that, and we will keep building elegant systems that work in our heads, but that real people walk straight past.
Darren Philp, Co-founder, Untamed Consulting
