- Expert explains how there has been a significant change in pensions over recent years
- She has also found a gender pay gap in pension provision
- Better financial wellbeing can come from people talking to their peers, family and employers about finances and pensions
Personal finance should not be seen as something “scary” to be shunned and avoided, according to a pensions expert at Aston University.
But Dr Hayley James said that finance provision, particularly pensions, also need to be improved and better tailored to individual needs.
Dr James, a senior research fellow in the Centre for Personal Financial Wellbeing at Aston Business School, was talking about her work in the latest episode of the ‘Aston means business' podcast, presented by journalist Steve Dyson.
She said: “My mission is really to improve financial well-being, to improve how people experience and engage with finance to make their lives better over the course of their lives.”
Dr James was on the subject of workplace pensions, and she previously worked at University College Dublin on pension policy in other countries. Discussing her new research at Aston University, she explained that there were two sides to her ‘mission’.
“First of all, it’s about making people more aware that finance isn’t this abstract thing and it’s maybe not as scary as people think, but it’s something they can engage with and talk about.”
But, as well as raising awareness, she said the “other side” was highlighting how existing systems need to be improved to better suit people’s needs.
She said: “That sometimes gets lost when we talk about finance because we think about it in this abstract or objective way.”
Dr James said there had been a “huge amount” of change in pensions, with a reduction in defined benefit final salary pensions that offered a guaranteed return.
“So now we have defined contribution pensions which most people in the UK now save into, where what you get out is dependent on what you put in, but also the investment returns of that money over the course of your lifetime.”
She said that meant much fewer guarantees which, in turn, makes people nervous as it is much harder to predict the future. She explained that automatic enrolment, introduced in 2012, meant employees automatically joined a workplace pension.
“But for young people especially that could be the very first experience of saving in a pension. You kind of feel something just happened to you and you don’t really know what it is. In my research, I found that most young people really feel they’re not ready to think about pension saving and put it off.”
Dr James said there was also a “huge gender pensions gap” due to lower pay and career breaks for women. And another interesting topic, although not yet part of her research, was how diversity and different cultural backgrounds shape how people think about pensions.
She said in the case of small and medium-sized businesses, employers need to give their staff more information, and more opportunities, around their pension scheme.
“There is lots to do here, such as how do we make pensions respond to people’s real needs. We need to think more about how pensions fit into people’s real lives and experiences.”
Dr James advocates that people talk to their peers, family and employers about their personal finance and said: “There is never a silly question when it comes to finances. But I sense that people hold back because they are scared of looking silly.”
More openness, she added, should lead to “better financial well-being” overall.
As well as pensions, Dr James explained that there were three strands to the Centre for Personal Financial Wellbeing at Aston Business School.
The first was around looking at how people engage with finance in their everyday lives, focusing on how to help them improve their financial situation.
She added: “We also do some work on financial education, and the third area is financial resilience – how do we improve long-term sustainability of financial systems.”
▪ Episode 7 in series 5 of the ‘Aston means business’ podcast can be found at https://www.aston.ac.uk/bss/aston-business-school/aston-means-business-podcast.
- Notes to Editors
Founded in 1895 and a university since 1966, Aston is a long established university led by its three main beneficiary groups – students, business and the professions, and the West Midlands region and wider society. Located in Birmingham at the heart of a vibrant city, the campus houses all the University’s academic, social and accommodation facilities for our students. Professor Aleks Subic is the Vice-Chancellor & Chief Executive.
Aston University is ranked 22nd in the UK in the Guardian University Guide, based on measures including entry standards, student satisfaction, research quality and graduate prospects. The Aston Business School MBA programme was ranked in the top 100 in the world in the Economist MBA 2021 ranking.
For media inquiries in relation to this release, contact Sam Cook, Press and Communications Manager, on (+44)7446 910063 or email: s.cook2@aston.ac.uk
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