Too much choice can be overwhelming...

...but it's critical you make the right choice when reviewing your pension scheme options 

In a famous study1 by psychologists Sheena Iyengar and Mark Lepper, customers at a high-end supermarket were offered samples of speciality jam. On the day they offered a choice of 24 types of jam, almost nobody went on to make a purchase even though the offer included a money off coupon.workplace-jam

On another day when they offered a choice of only six types of jam, 10 times as many customers did make a purchase - even though there was no money off coupon and the price was higher.

More isn't always best

There are lots of studies similar to this supporting the argument that more isn’t always best and that too much choice can be confusing, even with something as relatively simple as jam. But choice is good for us. Good choices are the decisions that keep us moving in the direction we want to go. However, different people presented with the same options will often make different choices that lead to different outcomes.

That doesn’t necessarily mean some of the decisions were bad: provided the decision-making process was appropriately thorough for the gravity of the situation, would stand up to scrutiny and is in keeping with the individual’s needs, values and aspirations then you could argue the decision was good regardless of the outcome.

case-study-schools

Teachers' pension scheme options

Going back to our jam analogy, if you’re one of the 100's of independent schools reviewing their teachers’ pension scheme options you may be facing a similar psychological test.

There are ready-made pensions targeted at schools that could potentially make some aspects of your decision-making process easier, but like many ready-made solutions these arrangements are unlikely to fit everyone perfectly. The fact that they are ready-made means they have not considered your school’s specific needs and unique staff demographics. Instead they have probably been designed for a broad target market and whilst some schools will fit that mould, others will not.  

Just like jam in the supermarket, there is plenty of choice in the workplace pensions market.  Unlike jam, however, it is critical your pension scheme decisions are good ones given that your choice and design of pension scheme could have a pivotal role in determining the future livelihoods for so many people.   

The result will ultimately come down to the quality of your decision-making process, making sure you thoroughly consider all the relevant factors of your pension scheme provision, including any other associated employee benefits, and fully exploring your options to ensure your choices best meet the needs of your school and staff.

We have experience supporting independent schools through the process of choosing and designing their pension schemes. If we can help you too, please get in touch.

 

Related stories:

Independent schools reviewing their pension scheme options urged to shop around... Steve Webb, former Pensions Minister, encourages schools to take advice before choosing a new pension arrangement.

All that glitters is not gold... Final salary pension schemes offered to teachers across the UK are often lauded as ‘gold plated’, bu they don’t glitter quite as much as the label implies

 


[1]  “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?”, a study by Sheena S Iyengar and Mark R Lepper

Posted by Graeme Bell

Topics: Workplace Savings, dc pension schemes, occupational dc

Questions

Ask The Experts

Want to get in touch?
Just fill out the form below and we will be in touch shortly.

workplace-rocket

Next Generation Savings

Changing Workplace Savings Behaviour for the Better

discover
workplace-bullseye

Consultancy

We provide consultancy services to employers and trustees on contract-based and trust-based schemes, including master trusts. Our proposition encompasses governance, investment, administration and communications.

more
workplace-governance

Governance

Establishing and governing the ideal workplace pensions and savings for your employees can be complex and time consuming. That’s where we come in.

Monitor
workplace-education

Engagement & Education

We use innovative communication channels and modern technologies to help educate, engage and inspire employees across a range of financial topics.

 

Find out more
workplace-deckchair

Retirement

With greater choice and freedom in how and when individuals are able to access their pension fund, there is now an even greater need for early education and advanced planning. Find out how we help.

Discover
workplace-graph

Investment

Our investment research division analyses and rates over 18,000 DC investment funds. The insight we have enables us to support your investment objectives, making sure they're on track to deliver.

track
workplace-health-risk

Health & Risk

Our health & risk service provides tailored combinations of cover and cost to exactly match each employer's requirements, helping you get best value for your benefits spend.

Discover