By David Brooks, Head of Policy at Broadstone
Summary
In this article, Broadstone’s Head of Policy, David Brooks, explores why employees often delay pension saving despite knowing it matters. Drawing on Meghan Sullivan’s theory of time bias, he argues that workplace pension schemes expose a deeper human challenge: employees are being asked to make decisions today for the benefit of a future self they do not naturally value in the same way as their present one. David explains what this means for employers – and how better defaults, clearer communications and employee pension design that works with human behaviour can help employees make stronger long-term decisions.
Employees find pension saving difficult because it asks them to care about a distant future self
Most employees know they should be saving more for retirement, but many still put off increasing their pension contributions. They tell themselves they will do it next year, when pay rises, or when life feels more settled. But that moment often stays just out of reach.
For employers, this can look like a problem of engagement or financial education. Sometimes it is. But that explanation feels too simple. I believe something deeper is happening.
Workplace pensions are not just financially difficult for employees. They are psychologically difficult too. They ask employees to make decisions today for the benefit of a much older version of themselves – someone who can feel distant, abstract and not quite real.
That makes pension saving one of the clearest examples of a wider human problem: we find it hard to treat the future as seriously as the present.
In this article, I want to explain why that matters for employers, why it should change how we think about pension engagement, and what employers can do to help employees make better long-term pension decisions.
Time bias makes sensible pension decisions harder than they look
In Time Biases: A Theory of Rational Planning and Personal Persistence, Meghan Sullivan argues that people are naturally biased in how they think about time and the future.
We do not value future outcomes in the same way we value immediate ones. Instead, we tend to prefer:
- Rewards sooner rather than later
- Costs later rather than sooner
- Choices that feel emotionally better in the moment, even if they may lead to worse outcomes overall
Sullivan’s central point is simple: when something happens should not completely change how much we value it. What follows from this is slightly uncomfortable. It suggests that pension saving is not just difficult, but an example of a quiet form of irrationality in how we treat different points in our lives. In short, timing affects our decisions.
Sullivan describes “temporal neutrality” – the principle that when something happens should not, in itself, determine how much we value it. In practice, however, we routinely give more weight to the present than the future, even when outcomes are similar.
That matters enormously for workplace pensions. Employees may understand that saving more is the sensible long-term choice, but psychologically the future can feel too distant to prioritise properly.
The challenge is not simply that employees could need more financial education. Even well informed employees make poorer decisions because the timing of outcomes feels different.
Employees are not bad at pensions – the task itself is unnatural
The instinct to give more weight to what feels immediate is why it is unhelpful to treat low pension engagement as a simple failure of discipline.
One of the most helpful aspects of Sullivan’s argument is that she does not describe people as careless or short-sighted in a simplistic way. Instead, she points out that our responses to time – anticipation, relief and urgency – are built into us. They are part of how we navigate the world.
Those instincts work well over short horizons. They work less well when employees are trying to plan across decades.
Employees are not “bad at pensions” in the way that is sometimes implied. They are responding in a very human way to a very unnatural task.
A workplace pension asks employees to:
- Prioritise a distant version of themselves
- Make trade-offs that do not feel immediate
- Accept lower disposable income today for an outcome they cannot yet feel
- Act as if the timing of that outcome should not affect how much they value it
Sullivan’s point is that, rationally, the timing of an outcome should not be the main reason we value it more or less. But psychologically, timing clearly does affect us. A cost today feels more real than a benefit decades from now, even when that future benefit matters far more.
Read more: Do politicians keep changing UK pensions? The reality for ordinary savers and trustees in 2026
Better workplace pension design should work with employee behaviour
The understanding that employees naturally give more weight to the present should change how employers think about pension engagement.Employers often treat pension outcomes as a function of knowledge or engagement. If employees understood more, the thinking goes, they would act differently.
There is some truth in that. Better communication matters. Simpler language matters. Helping employees picture their future more clearly matters. So does showing what contributions may mean in practical terms, rather than relying on abstract projections.
But there is also a limit.
If employees naturally give too little weight to their future selves, then the challenge is not just helping them understand the future. It is recognising how easily they can overlook it. That should influence how employers think about workplace pension design, default structures and member communications.
Automatic enrolment has been successful partly because it does not rely on employees waking up one morning with perfect long-term decision-making. It recognises inertia and uses it constructively.
The same principle applies more broadly. Good workplace pension design should reduce the need for repeated acts of future-focused willpower through:
- Effective defaults
- Contribution escalation
- Employer contributions
- Clear retirement pathways
- Communications that make the future feel more tangible
That does not mean removing choice. It means recognising that choice alone is not enough.
Read more: How inclusive design can improve workplace pension engagement
Employers need to help employees value a future they cannot feel
The real lesson for employers is not that employees are irrational and therefore need to be corrected. It is that pension saving asks something genuinely difficult of them.
It asks employees to value a future they cannot feel.
That is why workplace pension engagement can never be solved purely by more information. Information helps, but it does not erase the psychological distance between today’s employee and tomorrow’s retiree.
The task for employers, trustees, policymakers and advisers is therefore broader. They need to design systems that make good long-term decisions easier, more automatic and more emotionally meaningful.
Workplace pensions are about money, but they are also about identity. They require employees to act on behalf of someone they have not become yet. That is what makes pension saving genuinely difficult. It asks people to value a future they cannot feel yet, and to act on that consistently over time. The challenge for trustees and employers is not simply to inform, but to design systems that recognise how naturally that future can be overlooked.
Employees – like many people – can find pensions difficult to get right without appropriate support.
That is why pension systems need to be carefully designed to help them get pensions right.
Read more: The future of the State Pension: what’s changing and what’s here to stay
Get in touch with our Pensions Administration & Advisory team
If you want to understand how pension design, communication and governance can support better long-term outcomes for your workforce, Broadstone can help.
Important Information
This article is intended for employers, trustees and pension professionals. It is provided for information purposes only and does not constitute financial, investment or regulatory advice. Retirement outcomes will depend on multiple factors, including contribution levels, investment performance and individual circumstances, and are not guaranteed.
