How do people think about later life when making workplace pension saving decisions?

While behavioural economists posit that ‘present bias’ influences adults' propensity to save, we know very little about the cultural frameworks and internalised rationalities that people apply in real life contexts when making pension choices. This paper investigates how people anticipate the future when they make decisions about workplace pensions, considering whether they think about later life at all; if so, how they conceptualise it; and how these views shape their saving behaviour. These are important questions in the UK where private pension saving is essential to provide for old age, yet an estimated 12 million people do not invest enough for income adequacy in later life. We investigate this issue through in-depth interviews with 42 full time employees aged between 20 and 50 years, working for three large employers – a privileged group facing relatively few structural barriers to saving.

Later life was considered to be a distinct and uncertain phase in the long-term future, and thinking about it was uncomfortable. Most participants were unable to imagine what retirement might be like for them. People's thoughts about the future were disconnected from their pension saving decisions, even for those who were saving at higher levels. Instead people focussed on what they can afford in the present, prioritising stability and current standard of life over long-term saving; even the people who save do so because they feel they can afford to without jeopardising their standard of living.

We expect that if those in our sample with their relative advantages did not connect their present pension actions to their long term futures, this disconnect may be amplified in less privileged and more precarious groups, who have many more demands on their immediate income and far more uncertain futures. We argue that what has previously been identified as an unconscious ‘present bias’ is instead a conscious and culturally constructed mechanism that embeds everyday structural privileges into long-term savings.