[Thesis]. Manchester, UK: The University of Manchester; 2019.
Connecting policy with the personal: UK pension reforms and individual financial decision
Department of Sociology
University of Manchester
Pensions play an important role in our society as they provide for a time later in
life when people cannot, or do not want to, continue working. However, falling private
pension saving rates in the UK have led to concerns regarding the adequacy of provision
for later life. The automatic enrolment policy was introduced in 2012 to encourage
private pension saving by automatically enrolling employees into workplace pension
schemes. Automatic enrolment has led to more people participating in workplace pensions;
yet, most of those newly enrolled are saving at the minimum default contribution rates,
which are unlikely to deliver adequacy in later life, and members are not engaging
with financial incentives offered for greater contributions. The economic models of
decision-making that have provided the foundation for the pensions industry and supporting
policy have not been able to explain sufficiently why people are not engaging with
pension saving as expected.
This Thesis approaches pension decision-making as a practice embedded in the complexities
of everyday life which reflects the subjective nature of individual experience, drawing
on literature from the sociology of consumption. The research follows a constructivist-interpretivist
methodology using semi-structured interviews with 42 participants aged 25 to 45 years
old who had experienced automatic enrolment into workplace pensions. The findings
suggest that there are different approaches to pension decisions which connect to
the subjective understandings of the social, cultural and moral worlds of individuals.
The research identifies a typology of decision-making, with four approaches to pension
decisions, which are Threshold Adults, Protectionist Savers, Market Investors and
Sceptical Speculators. These are ideal types, which means that participants did not
fit neatly into one box, yet most were inclined towards one type. These approaches
were not fixed and may change over time, responding to the shifting context of an
individualĂ˘s everyday experience. These pension approaches represent specific challenges
for policy and industry in terms of recognising the complex and varied nature of personal
interaction with pension decisions. The contributions of this research are threefold.
First, it provides an empirically-grounded and theoretical understanding of pension
decision-making, which contributes to the formation of a sociological model of financial
decisions. Second, it promotes the importance of qualitative research methods to understand
financial behaviours, as opposed to the quantitative approaches dominant in literature.
Third, it offers policy solutions which may help to improve pension adequacy in later