Dan Mikulskis, chief investment officer at The People’s Pension, looks forward to a busy schedule next week and outlines why it’s right to be excited about the changes facing the UK’s pension system.
It’s that time again: the UK pensions industry’s biggest names are heading to Manchester, joined by top policymakers and regulators. There’s a strong argument that 2025 has been one of the busiest years for pensions in living memory.
Let’s be clear: UK pensions are enjoying a golden era. Defined contribution (DC) master trusts are scaling fast. Consolidation in the Local Government Pension Scheme is accelerating. Defined benefit (DB) schemes are reinventing themselves.
In 22 years in this industry, I’ve never seen a period like this. Big ideas aren’t just being discussed – they’re being actioned. The debate is no longer about where we’re going; it’s about making it happen.
Innovation in pensions, today and tomorrow
Within a couple of years, we’ll see at least a half dozen new, innovative retirement income products launched. That’s actual funds ready to start paying pensions, not theoretical ideas in a PowerPoint deck.
The UK is set to be a global innovator in this space, and it’s great to be able to track a conference theme where there is real progress that is noticeable from one year to the next, rather than more of the same talk.
The question of pension adequacy perennially features at these conferences, and rightly so. However, while that is for the future, there are important practical steps that can be taken in the here and now.
There is currently no way to compare two UK workplace pension schemes on cost and performance. This needs to change – fast. We believe there is a lot to learn from the Australian system here, but you need to meet consumers where they are and think carefully about whether the way the data is presented helps or hides (as is often the case in the industry).
More education and engagement would be great, but better transparency and an understanding of behavioural psychology and what drives consumer choice are essential first steps. This is why People’s Pension has commissioned research to better understand the role that Value for Money metrics for pensions might play in decision-making processes. I’m really looking forward to our session on this in Manchester with Sujatha Krishnan-Barman from The Behavioural Insights Team – I personally think it will be a must-see session.
Pivoting to a D2C approach
The workplace pensions industry has long been an institutional affair, centred around business-to-business (B2B) commerce, and steeped in associated jargon.
However, as old distinctions blur and fall away, we are all grappling with a pivot to greater direct-to-consumer (D2C) presence. This requires more accessibility, different priorities, and entirely new ways of thinking and communicating.
Over time, this will mature and more power will be placed in the hands of the consumer via initiatives such as pensions dashboards and the Value for Money framework, driving competition. Workplace schemes could set the standard in a combined market.
Looking ahead to 2030
Five years ago, I envisaged myself running mountain marathons and doing yoga retreats. Now, I have two toddlers – which is just to say that life comes at you fast and in unexpected ways. Predictions are hard.
In an industry undergoing rapid change, I welcome the idea of the five-year ‘look-ahead’ exercise. Going more than a little way into the future is always really hard work, but we must plan ahead over those time horizons and do our best to envisage the services and lines of communication that consumers will need and will value.
One thing is for sure: our industry will look pretty different in 2030 compared to today, and that’s an energising future to play a part in.
One area going under the radar that I think needs more attention is the question of the organisational architecture and design of these fast-growing and increasingly influential institutions at the heart of the UK pensions landscape.
There are a number of models for members and customers, with profound differences that aren’t talked about enough. Asset ownership is different to asset management.
There are profit-for-member models and shareholder-owned models; there are asset owners looking at the whole of the market and those with captive asset manager subsidiaries. At a more detailed level, they can invest through segregated mandates, pooled funds, and partnerships with managers. There are varying views on how to run private markets and the nature of what it really takes to be an asset owner team.
I’m slightly embarrassed to say that I think I have visited Melbourne more times than Manchester, so I look forward to making up for lost time and spending a solid few days powering towards the future of the most dynamic pensions market in the world.
Dan Mikulskis is chief investment officer at The People’s Pension.
