The Pensions Profession - An Overview

10th August 2023

The UK’s pension system plays a vital role in society. It ensures that a guaranteed lifetime income is provided to those who are too old or are too sick to continue in employment. It also pays benefits to the dependants of those who have died before reaching retirement age. 

Many countries, including some on the European mainland, provide a pension system via the State. In such cases, benefits are funded by taxation. However, the UK splits pension provision between the State and private pension schemes. These include occupational pension schemes and personal pensions. The UK’s first occupational scheme was established for Excise Officers in 1712. The system expanded significantly over the following centuries, and today some £3 trillion is managed by UK pension funds. 

The pensions industry is responsible for managing and investing the funds contributed by employers and employees to ensure that there are sufficient funds to pay benefits to the right people at the right time. This involves making investment decisions, monitoring investment performance, and adjusting investment strategies as required.

In addition to managing investments, the pensions industry is also responsible for ensuring that pension schemes comply with regulatory requirements and that scheme members receive the benefits to which they are entitled. This includes managing enrolment and contribution processing, calculating and paying out benefits, and handling any disputes and appeals.

The pensions industry is an important part of the financial sector, as pension schemes represent a significant source of savings for individuals and a major driver of investment in the economy. The industry has become increasingly complex in recent years, as new types of pension scheme and investment vehicles have emerged, and as demographic shifts have placed new pressures on the pensions system.

Major changes in the regulatory structure require pensions professionals to demonstrate a capacity for adaptation. A decade ago, the Government introduced a system of automatic enrolment, which saw employees who meet certain criteria being automatically enrolled into a workplace pension scheme. This in turn has led to the development of new kinds of pension schemes. There are now 37 Master Trust schemes which have been created specifically to help employers comply with their duties under auto enrolment. 

A Master Trust is a very large pension scheme which allows very many unrelated employers to join. Their size, combined with centralised administration and governance functions, ensure that members enjoy expert scheme management at minimal cost while employer responsibilities consist of little more than the regular payment of contributions. 

There are also new duties for pensions professionals, as consultants monitor the performance of schemes to ensure that there is full compliance with regulations. Regular reviews are necessary to ensure that auto enrolment schemes perform as well as their competitors. More recently, the Government has required the pensions industry to develop a ‘dashboard,’ which will allow members of the public to view all of their separate accrued pension benefits aggregated into a single online platform.  

To manage such a large system effectively requires talented and diligent professionals spread across a range of different career disciplines, including pensions managers, administrators, actuaries, consultants, lawyers, fund managers, IT professionals  and accountants.

Working in pensions offers exciting and demanding challenges. Regardless of their chosen career stream, pensions professionals need to be numerate. They should be able to work effectively as part of a team and be able to manage projects. They must be able to cope with an environment of almost continuous change. In particular, they need a talent for effective communication. For a detailed list of the skills needed to succeed within this profession, read the ‘Essential Skills to succeed in the Pensions Profession’ article.

Traditionally, entrants to the pensions profession have been graduates. Generally, a degree subject is not critically important as long as a candidate can demonstrate proficiency in English and Mathematics. In recent years, many employers have begun to offer apprenticeships, which offers an alternative to a University degree. Find out more about how to enter this profession by reading the ‘Routes into the Pensions Profession’ article.

Professional qualifications, such as those offered by the Pensions Management Institute, offer candidates an opportunity to progress further and faster. More information about this can be found in the ‘Qualifications and Training’ article.

A career in pensions is never dull or predictable and senior professionals can look forward to handsome financial rewards. The pensions profession is wide and varied, and for those with talent and enthusiasm, an exciting and fulfilling career awaits. 

About the Author

Tim Middleton
Director of Policy & External Affairs

Tim Middleton has worked in the pensions industry since 1987. His roles have covered consultancy with Bacon & Woodrow (now Aon), Mercer and Barnett Waddingham. 

He is currently Director of Policy and External Affairs for the Pensions Management Institute (PMI), where he works extensively on the Policy and Public Affairs Committee and provides input into PMI’s education and events programmes. 

He also writes frequently for the pensions press. He is a Fellow of the PMI and holds the CII’s Diploma in Financial Planning. He is a past chairman of the PMI’s London Group.

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