Experienced trustee and chair Rory Murphy challenges pension funds to be daring and embrace innovative ideas in order to best serve members’ interests.
“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”
Niccolo Machiavelli
The writings of the Florentine philosopher Niccolò Machiavelli have, in modern times, become synonymous with deception, treachery and violence in the unscrupulous pursuit of political power. So it may seem inappropriate to invoke Machiavelli in relation to UK pension provision in the 21st century.
However, there is much more to Machiavelli than just dastardly scheming. As generations of subsequent philosophers have acknowledged, he was above all a pragmatist, with an unerring ability to hit the nail on the head when it comes to human nature and behaviour, as the above quote demonstrates.
At a time when innovation is becoming a core feature of the pensions landscape, Machiavelli’s warning about the inherent difficulties of taking the lead in “the introduction of a new order of things” seems particularly apt.
The importance of innovation
Pensions and innovation are hardly synonymous – far from it. However, as the Pensions Regulator effectively acknowledged when setting up a pensions innovation service last year, without successful innovation, the pensions system that has delivered so much to so many for so long could face an existential threat.
Regulator aims to kickstart pension innovation through industry collaboration
The Pensions Regulator is seeking to collaborate with industry and other regulators to boost innovation in the pension system through a newly established innovation “service”, introduced in May 2025. The regulator said it intended to “streamline the process” of bringing new ideas to market. Read the full article.
The challenges facing pension funds relate not to any structural weakness in the pension proposition itself. Workplace pensions in the UK are one of the great welfare success stories of the 20th century, and perhaps this very success has led to timidity and ‘fear of being first’. There are many in the pension world who talk of innovation, but who don’t want to be a first mover – and fail to see the irony of that.
The attitude might be characterised as, if not complacency, certainly a resistance to radical new ideas. After all, ‘if it ain’t broke, don’t fix it’.
But this resistance to innovation also means the pensions sector is now less prepared to meet the challenges of the fast-evolving digital age than other financial services providers. The customer experience of personal banking, for example, has transformed over the past couple of decades. How many people still use chequebooks, or wait three working days for a payment to clear, or queue at ATMs?
It’s okay to stand out
Of course, pension funds don’t face the same commercial drivers as banks. Pension trustees don’t have the same worries about shareholders or competitors. As a trustee chair for many years, I’m all too aware that schemes face their own particular challenges, and certainly don’t underestimate them.
But I also worry that many trustees see change and innovation as being among those challenges, rather than as opportunities to make their own lives a little bit easier – and even, dare I suggest, to improve the member experience. This inertia in the face of change is as frustrating as it is baffling.
“It is heartening to see the regulator actively supporting and encouraging innovation, with a particular focus on using digital and data-driven technology to improve outcomes for consumers.”
Rory Murphy
I wonder why, for example, so many funds remain reliant on old-school, paper-based methods of staying in touch with their members, when quick and easy digital tools are available that can significantly improve data accuracy (and, in doing so, save money)? Or why pensioners have to wait until the end of the month to access the money they’re entitled to? Or why pension funds don’t use their unique relationship with their members to provide, or offer access to, other useful services?
It is, as Machiavelli suggested, not easy to be the first to break from the herd – especially in an area of the financial services sector in which there is no real commercial imperative to do so.
It is heartening to see the regulator actively supporting and encouraging innovation, with a particular focus on using digital and data-driven technology to improve outcomes for consumers.
Perhaps we might even reach a point where innovation ceases to be seen as a threat or an inconvenience, and instead “a new order of things” becomes an inherent and ongoing feature of the pensions landscape. Machiavelli, I imagine, would approve.
Rory Murphy is a pension scheme trustee and chair, and the former chair of the Merchant Navy Officers’ Pension Fund.
