Research report

Household financial decision

making: Qualitative research
with couples
by Andrew Wood, Kate Downer, Becky Lees and
Annalise Toberman
Department for Work and Pensions

Research Report No 805

Household financial decision

making: Qualitative research
with couples
Andrew Wood, Kate Downer, Becky Lees and Annalise Toberman

A report of research carried out by RS Consulting on behalf of the Department for Work
and Pensions
© Crown copyright 2012.

You may re-use this information (not including logos) free of charge in any format or medium, under
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This document/publication is also available on our website at:

http://research.dwp.gov.uk/asd/asd5/rrs-index.asp

Any enquiries regarding this document/publication should be sent to us at:

Central Analysis Division, Department for Work and Pensions, Upper Ground Floor, Steel City House,
West Street, Sheffield, S1 2GQ

First published 2012.

ISBN 978 1 908523 79 2

Views expressed in this report are not necessarily those of the Department for Work and Pensions or
any other Government Department.
 Contents iii

Contents
Acknowledgements.................................................................................................................................... v
The Authors................................................................................................................................................. vi
Abbreviations and glossary of terms.................................................................................................... vii
Summary......................................................................................................................................................1
1 Introduction..........................................................................................................................................5
1.1 Background................................................................................................................................5
1.2 Research objectives..................................................................................................................6
Behavioural economics..............................................................................................................6

1.3 Policy objectives........................................................................................................................6

1.4 Project methodology...............................................................................................................7
1.4.1 Research design..........................................................................................................7
1.4.2 Target audience..........................................................................................................7
Recruitment criteria used..........................................................................................................8

2 Attitudes to financial decision making......................................................................................... 10

2.1 Attitudes to managing finances......................................................................................... 10
2.1.1 Factors influencing attitudes................................................................................ 11

2.2 How couples go about decision making........................................................................... 12

2.2.1 Triggers to decision making.................................................................................. 12
2.2.2 The process itself..................................................................................................... 13

2.3 Roles played in the decision-making process.................................................................. 14

2.3.1 Alpha and beta roles............................................................................................... 14
2.3.2 Male and female roles............................................................................................ 15

3 Decision-making typologies............................................................................................................ 18
3.1 Creating typologies............................................................................................................... 18
3.2 Type 1: Unbalanced Responsibility..................................................................................... 19
3.2.1 Decision-making dynamics................................................................................... 19
3.2.2 Attitudes towards retirement planning.............................................................. 20
3.2.3 Defining characteristics.......................................................................................... 21
3.2.4 Case study: Cara and Tim...................................................................................... 21
iv Contents

3.3 Type 2: Cautious and Content............................................................................................. 22

3.3.1 Decision-making dynamics................................................................................... 23
3.3.2 Attitudes towards retirement planning.............................................................. 23
3.3.3 Defining characteristics.......................................................................................... 24
3.3.4 Case study: Debbie and Mathew.......................................................................... 25

3.4 Type 3: Organised Aspirational........................................................................................... 26

3.4.1 Decision-making dynamics................................................................................... 26
3.4.2 Attitudes towards retirement planning.............................................................. 27
3.4.3 Defining characteristics.......................................................................................... 28
3.4.4 Case study: Ryan and Sarah.................................................................................. 28

4 Retirement decision making........................................................................................................... 30

4.1 Plans in place for retirement............................................................................................... 30
4.1.1 Saving into a workplace pension.......................................................................... 30
4.1.2 No provision for retirement................................................................................... 31

4.2 Inhibitors to retirement planning...................................................................................... 32

4.2.1 Long-term decisions with long-term consequences....................................... 32
4.2.2 The appeal of tangible outcomes........................................................................ 34
4.2.3 Rejection of retirement planning......................................................................... 35
4.2.4 Inertia........................................................................................................................ 36
4.2.5 Likely reactions to automatic enrolment........................................................... 38

5 Conclusions......................................................................................................................................... 40
5.1 The process of couples’ decision making......................................................................... 40
5.2 The respective partner roles in financial decision making............................................ 40
5.3 The existence of household decision-making typologies............................................. 40
5.4 The individual character of retirement planning............................................................ 41
5.5 The difficulty of engaging with pension products.......................................................... 41
5.6 Active rejection of pension saving..................................................................................... 42
5.7 The lifelong influence of inertia on retirement planning.............................................. 42
5.8 Implications of the research findings for automatic enrolment................................. 42
References................................................................................................................................................. 43
 Contents v

List of figures
Figure 2.1 Typical form of discussion during the decision-making process........................... 13
Figure 2.2 Example of male and female roles in the decision-making process.................... 16
Figure 3.1 Defining a typology for couples’ behaviour............................................................... 18
Figure 4.1 Short-term and long-term decisions and consequences....................................... 32
Figure 4.2 Ease of decision making about different items and products............................... 35
Figure 4.3 Typical variation in the types of inertia inhibiting retirement over time.............. 38
vi Acknowledgements

Acknowledgements
We would like to thank the Department for Work and Pensions (DWP) for supporting this piece
of research.

Rob Hardcastle and Vicky Petrie were responsible for liaison between DWP and RS Consulting,
and provided vital support and guidance throughout this study.

We would also like to thank the couples who generously gave their time to participate in
this research.
 The Authors vii

The Authors
Andrew Wood, Research Director, specialises in public policy and financial sector research, for both
public and private sector clients. He has run many high-profile studies for the Department for Work
and Pensions (DWP), covering different aspects of the international pensions landscape, the UK
pension reforms, retirement saving and decision making. He read Modern and Medieval Languages
at the University of Cambridge.

Kate Downer, Associate Director, specialises in public policy, financial and third sector research. She
has led several studies commissioned by DWP into retirement-related decision making. She read
Modern and Medieval Languages at the University of Cambridge and Management and Business
Research Methods at the Open University.

Becky Lees, Research Executive, specialises in public policy and third sector research, and has worked
on public sector studies for bodies including the National Health Service (NHS), Age UK and Transport
for Greater Manchester. She read English Language at the University of Leeds.

Annalise Toberman, Research Executive, specialises in public policy and financial research, and
has contributed to several studies for DWP, including a study assessing the cost of transferring
pension pots between providers. She read Government at the London School of Economics and
Political Science.
viii Abbreviations and glossary of terms

Abbreviations and glossary

of terms
Automatic enrolment Pension scheme enrolment technique whereby an employer
automatically enrols eligible jobholders in the workplace
pension scheme without the employees having to make a
separate application for membership. Employees are able to
opt out of the scheme if they prefer.

Contract-based pension See Personal pension.

DB Defined benefit

Defined benefit scheme Occupational pension scheme specifying the benefits that are
paid on retirement (e.g. a fraction of salary for each year of
service). Also known as a ‘salary-related’ scheme.

DC Defined contribution

Defined contribution scheme Occupational pension scheme where the amount of pension
is determined by contributions paid into the scheme and
investment returns. Also known as a ‘money purchase’ scheme.

DWP Department for Work and Pensions

Independent Financial Adviser An adviser, or firm of advisers, that is in a position to review

all the available products and companies in the market as the
basis for recommendations to clients. All IFAs are regulated
directly by the Financial Services Authority.

IFA Independent Financial Adviser

NI National Insurance

Occupational pension Pension scheme set up by an employer for the benefit of

employees, with the employer generally making contributions
to the scheme and meeting administrative costs. The scheme
is provided via the employer, but takes the form of a trust
arrangement and is legally separate from the employer. Types
of occupational scheme include defined benefit, defined
contribution and hybrid schemes.

Personal pension A pension that is provided through a contract between

an individual and a pension provider. The term generally
comprises personal pensions, which are arranged by individual
employees, and group personal pensions, access to which is
facilitated by an employer.
 Abbreviations and glossary of terms ix

Provider An organisation, usually a bank, life assurance company or

building society, which sets up and administers a pension
scheme on behalf of an individual or trust.

Stakeholder pension A personal pension scheme which complies with regulations

which limit charges and allow individuals flexibility about
contributions, introduced in April 2001. Employers with five or
more employees who do not provide a pension scheme with
an employer contribution of three per cent or more have a
legal obligation to provide access to stakeholder pensions, but
are not obliged to make contributions.

Trust-based pension See Occupational pension.

Workplace pension Any pension scheme provided as part of an arrangement

made for the employees of a particular employer.

Workplace pension reforms The reforms introduced as part of the Pensions Act 2008 (and
updated as part of the Pensions Act 2011): the measures
include a duty on employers, starting in 2012 and on a rolling-
programme basis, to automatically enrol all eligible jobholders
into qualifying workplace pension provision.
 Summary 1

Summary
This report summarises the findings of a study commissioned by the Department for Work
and Pensions (DWP), to increase understanding of the way that couples go about financial
decision making.

Background
This research was commissioned in order to explore and better understand the way that couples
make financial decisions, both in general, and specifically regarding their retirement. It was
also designed to gain a clearer understanding of couples’ attitudes to retirement planning and
household finances more broadly, with a particular focus on the incidence of ‘life events’: significant
‘milestones’ in adult life, such as becoming a homeowner, marriage and parenthood. We sought
to understand the degree to which retirement planning within couples is done independently or
collaboratively, and the extent to which couples discuss or rely upon the other’s provision. A further
objective was to uncover possible decision-making typologies among couples.

Research scope
The study was qualitative in nature, and consisted of in-depth, face-to-face interviews with 24
couples who were married or in long-term relationships. Interviews took place in couples’ homes,
and included people from a wide range of backgrounds. Couples were first interviewed separately,
and then together, in order to understand individual perspectives as well as those of the couple.

The project team used several criteria to recruit couples to the research. We included couples where
at least one partner was in paid full-time or part-time employment. Anticipating that the types of
financial decisions couples make would depend to some extent on their earnings and wealth, we
included households with a range of different levels of income. We also specified that the majority
of individuals should earn a minimum of £7,500, so that they were potentially within the scope of
automatic enrolment.

Key findings
The decision-making process
Couples did not typically enjoy managing their household finances, but recognised the importance
of planning outgoings around incomings, and of living within their means. Managing household
finances was perceived essentially as something of a necessary evil.

Where couples had actively made financial decisions, this was often in response to ‘life’ triggers
such as marriage or becoming parents, or ‘financial’ triggers involving a change to the household’s
income. Discussions about possible courses of action began after this trigger took effect, usually
increasing in momentum over time, and culminating in the final decision.

The easiest decisions for couples to make were those that took little time to action, and had short-
term consequences: even the least financially confident individuals could participate actively in
these transactions. Examples were making purchases for their children, or buying holidays. In
contrast, only a few people had managed to engage actively with long-term decisions that had
long-term consequences, such as saving into a pension scheme.
2 Summary

Roles in financial decision making

Within most couples we identified an ‘alpha’ and a ‘beta’ partner:
• Although not necessarily financially confident or knowledgeable, the alpha partner took more
control over financial issues and decisions than their counterpart. Their behaviour was often borne
out of necessity; specifically, the beta partner’s unwillingness to take on financial responsibility,
rather than their own eagerness to take financial control. Women typically took on the role of the
alpha partner in the couples interviewed. They, therefore, tended to be the partner who instigated
financial decisions, and who carried out the research – often online – that informed its outcome.
• While beta partners usually provided at least some input to decisions, they took a relatively low
level of responsibility compared to the other partner. Beta partners were more frequently male
than female.

There were indications that the alpha and beta behaviours became established norms for those
fulfilling these roles, with beta partners becoming accustomed to relying on their alpha counterparts.

While couples described their decisions as collaborative, their accounts of the decision-making
process tended to indicate that it was only really at the final stage, where a conclusion was reached,
that both partners were involved to a great extent.

This suggests that policy communications could take into account the respective decision-making
roles by appealing to the female alpha partner. Reaching out to beta partners may be less effective,
given their reliance on their partners for longer-term financial planning.

Decision-making typologies
The research identified three groups, whose members shared characteristics in the way that
they went about financial decision making and in their wider attitudes to finances: ‘Unbalanced
Responsibility’, ‘Cautious and Content’, and ‘Organised Aspirational’.
• Couples in the Unbalanced Responsibility group tended to comprise an alpha partner – often a
woman – with a high level of financial control relative to the other person in the relationship. The
alpha partner frequently mentioned the need to rein in the beta partner in order to protect the
household finances. Many couples in this group were relatively young, in their 20s or 30s.
• Couples in the Cautious and Content group were typically older than those in the other two,
owning their homes outright or being close to doing so. Couples in this group were generally
careful with money, and stressed the importance of not exceeding their financial limits: their
ambitions were typically tempered by what they thought they could afford. Couples in this group
reported being relatively comfortable managing their household finances.
• Couples in the Organised Aspirational group were a mix of ages and incomes, and generally more
confident with money than other groups. Although there were alpha and beta partners, the two
individuals differed from each other less than in other groups: the alpha partner tended to take
the lead as the ‘researcher’, but the beta partner was not reliant on their partner through a lack of
financial awareness or capability. Rather, the beta partner tended to be more relaxed about the
household finances, or openly admitted to having less interest in finances than their partner.

The difficulty of engaging with pension products

The research highlighted the possible limitations of taking a couple-oriented perspective to
encouraging pension saving: couples typically perceived pensions as individual rather than joint or
household products.
 Summary 3

Even older couples discussed retirement only occasionally, and few people had been active in
making provision for retirement. A handful of people interviewed held individual personal pensions,
typically the result of more general financial conversations with advisers, be they professional or
more informal advisers. Non-state pensions, where held, were usually workplace pensions that the
individual had accepted when offered by the employer, rather than the individual or couple having
selected them proactively. Membership of a workplace scheme was typically the result of individual,
rather than household-level decision making; therefore the workplace is likely to be the most
appropriate space in which to communicate information about pensions, particularly automatic
enrolment. While discussions about pension policy developments could still occur at home, such as
when beta partners look to their partner for guidance, giving individuals the relevant information
at work is likely to be the most effective starting point to engaging with pension products and
stimulating decision making.

Couples saw retirement planning as a process involving long-term decisions and long-term
consequences: no immediate or tangible benefit was recognised as a result of beginning to
contribute to a pension. Consequently, it could be difficult for momentum to build in the same way
as it did for other financial decisions. Moreover, while financial decisions were typically instigated by
triggers, few triggers appeared to create engagement with, or prompt decisions about, retirement
provision or pensions. These triggers appeared too weak, or too long-term in nature, to instigate
discussions of, or decisions about, retirement planning. Few people felt truly confident about their
finances, and pensions-related decision making was typically unfamiliar: pensions felt like an
unknown to many.

To overcome the difficulty of engaging with pension products, the potential positive outcomes of
pension saving could be conveyed more effectively by leveraging life triggers. For example, linking
pension saving to providing for children may prompt active decision making.

In addition, emphasising the immediate protection that beginning to save into a pension could
provide, may go some way to addressing the lack of tangibility and feedback that can often inhibit
the decision to save in a pension.

Excuses for putting off retirement planning

It was typical for couples to rationalise not having made specific provision for retirement. Some
planned to work beyond State Pension Age, or to sell their current home and buy a smaller, cheaper
property, living from the proceeds of the sale. Other people claimed they had, or would, put money
into savings accounts instead of pension schemes. Some younger people intended to save more for
their retirement when they earned a higher salary, but explained that they could not afford to do so
at present.

Some individuals gave reasons for rejecting retirement planning. There were a variety of reasons for
this, such as people’s tendency (and preference) to focus on the present, and the uncertainty they
felt about the future or possible returns from pension products generally. However, explanations
given for lack of retirement planning appeared to be instigated predominantly by the interview
setting, and retrospective in nature, rather than the result of previous careful consideration.

This implies that there may be value in educating individuals who genuinely reject pension saving
not to opt out of workplace schemes once enrolled, particularly with regard to the introduction of
automatic enrolment. Arguably those in the Unbalanced Responsibility group should be targeted
in this respect, since they display the most negativity towards pensions and automatic enrolment
specifically. Conversely, the research suggests that individuals in this group are most inert when it
comes to making retirement-related decisions, implying that they are unlikely to actively opt out of
the scheme.
4 Summary

The role of inertia

Couples were distracted from long-term financial planning by three different types of inertia that
we identified:
• The most prevalent type, ‘day-to-day inertia’, stemmed from the ongoing and constant need to
manage the couple’s home and family. Households tended to focus on immediate needs and
tactical financial issues, rather than strategic ones, or long-term planning. Day-to-day inertia did
not result from a lack of disposable income, but from couples’ unwillingness or inability to devote
thought and attention to long-term planning, as well as large numbers of short-term financial
decisions.
• ‘Material inertia’ took effect when couples were restricted in their planning by low levels of
disposable income, limiting their scope for decision making. Some couples also mentioned
demands on their time from other factors, again reducing their ability to make long-term
financial plans.
• ‘Emotional inertia’ resulted from couples’ underlying fear or sense of intimidation when faced
with financial products and decision making.

The combination of the ‘unknown’ nature of pensions, the fact that they did not provide instant
benefits, and the backdrop of multiple layers of inertia, often resulted in passive – and often
individual – retirement-related decision making.

While all of these different types of inertia made retirement planning difficult, the resulting
unresponsiveness indicated that people would remain in pension schemes after being automatically
enrolled by their employer.

Implications of the research findings for automatic enrolment

The research highlighted couples’ passivity around pensions and retirement decisions, and
suggested it was unlikely that they would increase their engagement as a result of being
automatically enrolled in a workplace scheme. There were indications that people would simply
remain in employer schemes after being enrolled automatically, and this included even those
couples who voiced scepticism about pension products.

There was little evidence to suggest that automatic enrolment might encourage people to increase
their contribution levels.
 Introduction 5

1 Introduction
This report gives the findings from a qualitative research study exploring the way that couples go
about financial decision making. This chapter provides context for the research and describes the
methodology used.

Views and behaviours regarding financial planning, and retirement planning specifically, are
complex; there are many factors that can play a role in determining couples’ decision making in
relation to retirement planning, such as gender, age, significant life events – ‘milestones’ in adult
life, such as becoming a homeowner or a parent – and family upbringing, to name a few.

Building on existing evidence about retirement planning and saving, this study seeks to better
understand how retirement decisions are made within households, any factors that influence
these decisions; and, finally how the process might be affected by automatic enrolment. The
research findings will inform discussions on how best to encourage retirement planning and
saving among couples.

1.1 Background
The existing knowledge base for retirement-related decision making suggests that a number of
factors influence both decision-making dynamics within households, and the types of decisions made.

Several publications suggest that a gender split exists in financial decision making. For example,
a DWP Working Paper on individuals’ attitudes and behaviours regarding retirement saving and
planning suggests that many women are in control of short-term financial planning and rely on their
partners to manage longer-term financial matters.1 Research undertaken by Bernasek and Bajtelsmit
(2002) indicates that a woman’s degree of involvement in household financial decision making is not
so fixed, and instead positively correlates with her share of household income and wealth.2

Bernasek and Bajtelsmit (2002) suggest that women are more risk-averse than men.3 According
to Thomas et al. (2009), men are conversely more likely to consider taking financial risks in hope
of a better return.4 The claim that women are more cautious financially could have significant
implications for retirement saving: for example, Bryan et al.’s (2011) analysis of Wave 1 of the Office
for National Statistics (ONS) Wealth and Assets quantitative data found that women are 4.6 per
cent more likely than men to save for a pension when eligible for an occupational scheme.5 The
same report suggests that male and female partners often do not adopt a household-level pension
strategy: where one partner does not save, or saves very little, in a pension, the other partner does
not necessarily compensate by saving more in a pension themselves.

1
Thomas, A. et al. (2009). Individuals’ attitudes and behaviours around planning and saving for
later life. DWP Working Paper No 72.
2
Bernasek, A. and Bajtelsmit, V. L. (2002). Predictors of women’s involvement in household
financial decision-making (Financial Counselling and Planning Vol. 13[2]).
3
Bernasek, A. and Bajtelsmit, V. L. (2002).
4
Thomas, A. et al. (2009).
5
Bryan, M. et al. (2011). Who Saves for Retirement? (The Strategic Society Centre and Institute
for Social & Economic Research).
6 Introduction

There are indications from research produced by Thomas et al. (2009) that age is potentially another
factor influencing couples’ financial decision-making strategy and characteristics, not least with
regard to pensions-related decisions. Younger people often feel that they are not old enough to
seriously consider retirement.6 Significant life events that tend to correlate with increased age,
such as buying a house, getting married and having children may affect how couples think about
retirement and pension provision.7 Quantitative research by Smith (2006) suggests that pension
participation rises with age, but peaks among people in their 40s.8

1.2 Research objectives

This qualitative research study was designed to deepen understanding of how these and other
considerations impact on views and behaviours regarding retirement planning. DWP commissioned
RS Consulting to explore the financial decisions couples make in general and specifically for
retirement. The broad objectives were to:
• explore how households make decisions about pension saving and retirement more generally,
including uncovering any possible typologies of decision making;
• examine the extent to which retirement planning is independent or collaborative, and how far
partners in a relationship discuss their separate and/or joint plans. Specifically, we sought to
understand the degree to which they consider or depend on their partner’s provision, and whether
they discuss this or make assumptions. We also wished to capture how the extent of collaboration
versus independence during the decision-making process varies across households;
• gain a clearer understanding of couples’ underlying attitudes to and behaviour around pensions,
saving and retirement planning, in particular within the context of the life-cycle and the incidence
of life events;
• gain a sense of the level of influence of socioeconomic and demographic factors on how decisions
are made.

Behavioural economics
Classical economics regards people as rational and self-preserving; behavioural economics puts
forward a different view, arguing that people make much less rational decisions in real life. This
theory could have significant implications for how people plan for later life. Consequently, the
research was also intended to observe and discuss real-life triggers and barriers to decision making.
It draws upon behavioural economic theory to contextualise partners’ actions and attitudes.

1.3 Policy objectives

The research will feed into discussions around:
• Whether policy developments could help people to overcome inhibiting factors and encourage
pension saving: either increasing existing provision, starting new provision, or maintaining existing
provision for their retirement through the life course or when faced with specific life events.

6
Thomas, A. et al. (2009).
7
Thomas, A. et al. (2009).
8
Smith, S. (2006). Persistency of pension contributions in the UK: Evidence from aggregate and
micro-data. CMPO, University of Bristol, Working Paper No. 06/139.
 Introduction 7

• Whether communications could be tailored to communicate the benefits and counter negative
messages around retirement planning, and take into account the dynamics of different decision-
making types.
• The possible implications for policy developments of the characteristics that are influencing the
level and nature of retirement provision and, specifically, intended reliance on a spouse or partner
during retirement.
• Whether and how couples would hold discussions about automatic enrolment. Automatic
enrolment seeks to increase pension provision by requiring all employers to enrol employees aged
22 to State Pension Age into a designated scheme, provided they earn above an annual salary
threshold. Employees are free to opt out of the pension scheme. This research aims to contribute
to the growing body of evidence on the likely impact of automatic enrolment, within the context
of household financial decision making.

Section 1.4 details the research methodology used by our project team with these objectives
in mind.

1.4 Project methodology

The data was collected through a programme of qualitative depth interviews. The methodology is
described in detail in the following sections.

1.4.1 Research design

The RS Consulting project team conducted face-to-face interviews with 24 couples. Interviews took
place in couples’ homes, because participants were more likely to feel at ease and comfortable
speaking openly about some potentially sensitive financial issues in this setting.

The interviews lasted approximately 90 minutes and were divided into three separate 30-minute
sections: an interview with each partner individually followed by a ‘paired’ interview with both
partners together as a unit. This allowed us to understand each partner’s views on their role in
household financial decision making and attitudes towards retirement planning individually, as well
as their joint outlook and perceptions. Using this approach, we gained detailed perspective on the
decision-making process.

Interviews were conducted over a three-week period between 20 February and 9 March 2012 by the
RS Consulting project team.

This research was qualitative, and its findings should not, therefore, be generalized or extrapolated
to the wider population. The couples who participated are discussed individually where their
experiences or decision-making characteristics exemplify trends across all 24 couples, or where
they are particularly illustrative or interesting for another reason.

All of the couples who took part in the research have been given pseudonyms and made
anonymous in this report.

1.4.2 Target audience

As the research focused on how couples make financial decisions, particularly about retirement, we
required at least one partner in every couple to be in paid employment. While we did not specify
that a number of individuals should definitely be within the scope of automatic enrolment, we
stipulated that each participant still in paid employment must earn a minimum of £7,500 before
tax, so that they would potentially be within scope.
8 Introduction

We spoke to a range of couples, ensuring that different age groups, household income bands and
relationship types were represented in the research. Additionally, the mix of participants allowed
us to explore differences in views and behaviours by sub-group.

Recruitment criteria used

The project team used the following criteria to recruit couples for this research:
• Employment status:
–– of the 24 couples that we spoke to, half (12 couples) were both working full-time;
–– in seven couples, one partner was in full-time employment and the other in part-time
employment;
–– in a small number of couples (three), one partner was fully retired;
–– in one couple, one partner was on maternity leave, and in another one partner was unemployed;
–– in total, 22 couples included one or more individuals who were within the scope of automatic
enrolment. There were two couples where neither partner was eligible.
• Household income:
–– household income was a key consideration, because the types of financial decisions couples
make depend to some extent on their income and wealth;
–– the definition of income we used included all earned income received annually by both partners
before tax, as well as any benefits or income from maternity or paternity leave, or from a
pension. Using this definition:
–– two couples earned under £20,000;
–– eight couples earned between £20,000 and £35,000;
–– 11 couples earned between £35,000 and £44,999;
–– three couples earned £45,000 or more.
• Age:
–– we anticipated age, or life stage, to have an influence on couples’ financial decision making and
retirement planning, so it was important to cover a spread of age groups;
–– five couples were in their 20s;
–– seven couples were in their 30s;
–– seven couples were in their 40s;
–– three couples were in their 50s;
–– two couples were in their 60s;
–– two of the couples comprised partners with an age gap of ten years or more.
• Marital status:
–– we interviewed 12 couples who were married;
–– nine of these couples had been married for over two years, while three had been married for
less than two years;
–– two couples were in civil partnerships;
 Introduction 9

–– we also interviewed ten couples who were in a long-term relationship; we defined this as
co-habiting couples who owned a property together, or had at least one child together.
• Ethnicity:
–– the majority of couples interviewed (16) were both White British;
–– one couple were both Black British;
–– one or more partners in seven couples were of non-British ethnicity, originating from countries
in Asia, South America, Continental Europe and the Caribbean.
• Location:
–– we interviewed couples in a mix of urban, suburban and rural locations;
–– ten of the couples interviewed were in London and the South East;
–– five were in the North West;
–– five were in the North East;
–– four were in the Midlands.

We also considered the types of ‘significant’ financial decisions made by couples when selecting our
participants. Significant decisions were categorised into three types:
• The first was made up of decisions that the couples had little control over. These included one
partner becoming unemployed, needing major repairs to their home, or one or both partners
getting a job that paid significantly more than their previous position.
• The second comprised decisions that the couples actively chose to make. These included having
a child, buying a new car, buying their first home, one or both partners reducing their hours with a
view to retiring, one partner entering retirement, giving up or reducing work to care for someone
or return to education, buying an expensive, ‘big’ holiday, or buying something for their home that
cost a significant amount of money.
• The third consisted of decisions that were specifically financial in nature. These included one or
both partners starting to make regular contributions towards a pension, one or both partners
increasing or decreasing the amount they contributed, one or both partners taking out a new
investment with a view to using it in retirement, and the couple taking out life insurance or
income protection for the first time.

Most couples we interviewed had made what we identified as a significant financial decision in the
last few years; however, we intentionally included some who had not made any of these decisions
within this timeframe, in order to explore potential barriers to decision making.

Perhaps unsurprisingly, the most common significant decisions made were purchasing big holidays
or a new car (ten couples). Seven couples had either entered a pension scheme or increased pension
contributions in the last three years. Five couples had bought their first home; one had bought a
second home. In five of the couples, one partner had experienced unemployment in the last few years.

Other significant decisions couples had made included having a baby, taking out life insurance,
taking out income protection, taking out a new investment, reducing working hours, getting married
and starting a new business.
10 Attitudes to financial decision making

2 Attitudes to financial
decision making
This chapter examines attitudes to household finances and the way people feel about managing
them. It goes on to discuss the way that couples go about making financial decisions.

We encountered a spectrum of different attitudes to household finances among the couples, and a
wide range of degrees of confidence in managing them. Chapter 3 attempts to introduce a decision-
making typology to understand groups who share characteristics. Here, we provide broader context
about couples’ financial attitudes and behaviour.

2.1 Attitudes to managing finances

It is fair to say that across most of the couples interviewed, household finances were not a topic
that generated enthusiasm or confidence. Typical negative words and phrases that people linked
with household finances included ‘stressful,’ ‘difficult’ and ‘boring’. However, almost all individuals
underlined directly or implicitly the importance of managing their money, and of living within their
means. Managing household finances was thought of essentially as a necessary evil.
‘It’s a necessary evil, really. I’ve got it down to quite a fine art … You long for the day you get
paid, don’t you, and then you get it, and within minutes the lot’s gone because you’ve had to
budget for all your bills … But it’s just one of those things.’
(Hannah, 40s, Midlands)

Management of the household finances was also seen to be ‘time-consuming’ by several, although
some couples indicated tactics they had put in place to reduce the time that it took, such as
arranging for annual bills to be paid soon after payday, and paying regular bills via Direct Debit.
Again, this reflected the perception of managing finances as something that was important, but
not enjoyable.

Those who were daunted by household finances were sometimes more positive when describing the
way they felt about actually managing finances and ‘staying on top’ of their money.
‘[I get] a little bit [excited] because I know exactly what is going out and sometimes it is a little
bit over. I can play with that or save that or move it to something else or if he gets excited about
something I can afford to go out and say, “We can do that,” or, “We can’t do that.”’
(Abbey, 40s, South East)

A minority of couples did have positive associations with household finances, reporting that
they were relatively confident, or at least comfortable with handling them. Often, these couples
recognised, and were comfortable with, what was within their financial reach, and were content
with this. For example, while Jack and Jodie did not believe themselves to be ‘well-off’, they had
enough money for the hobbies they really enjoyed. Nevertheless, they gave careful consideration
to financial decisions concerning these hobbies.
‘We’re both fairly careful. I’m looking at the moment for expensive equipment for my camera,
which is just my hobby […] but I think about it very, very carefully.’
(Jodie, 50s, North West)
 Attitudes to financial decision making 11

Even those individuals who described themselves as confident tended to adopt a relatively cautious
approach to household finances, again underlining the importance of living within their means.
Typically, these couples acknowledged that things could go wrong and had taken steps to mitigate
financial risks they identified. For example, Cara and Tim had taken out a mortgage that they would
be able to pay out of only one partner’s salary, should the other stop earning. Miles and Marcus
recognised launching their own business as a major decision, and had done a lot of research before
going ahead with it.

Few of the individuals we spoke to demonstrated significant financial ambition or a conscious

appetite for risk. As noted, living within their means was generally highlighted as important, and
many linked finances to terms like ‘uncertainty’. No couples thought that they held risky or volatile
investment products, for example.

2.1.1 Factors influencing attitudes

Individuals’ and couples’ own previous experiences and financial past had often impacted negatively
on the way they now felt about handling finances. A few couples had made financial decisions,
or experienced the consequences of others’ decisions or behaviour, that had had significant
repercussions, and had caused them to treat their money with caution as a result.
‘We did make mistakes, years ago, by shifting from one endowment place to another one,
and being told all the wrong things. We lost out on a canny bit of money.’
(Edith, 60s, North East)

Specifically, some individuals’ parents had set examples, positive or negative, that had bred financial
confidence and caution respectively.
‘I think I’ve always been pretty confident with money and with decisions like that. My parents
bought and sold property, and I think I’ve always been listening to their conversations. It’s never
really been a big issue.’
(Kelly, 20s, North East)

‘I suppose [his wife Debbie’s] history is that [her] dad is a bit casual about finances, and my
father died when I was very small, so I think there’s a bit of insecurity in my background that
makes me cautious rather than cavalier.’
(Mathew, 60s, South East)

Becoming parents had affected several couples’ attitudes to household finances. One example was
the need to prioritise children’s material needs first, sometimes meaning that parents would forego
‘treats’ that they had enjoyed in the past. Others had realised the importance of making sure their
children were provided for, in the event of their death.
‘Since having the baby, my views on myself have changed. I’m understanding that I have got to
change my attitude to money, to be more grown up about it.’
(Laura, 30s, South East)

Lastly, the financial climate and the 2008 crash had had a negative influence on several couples’
current attitudes. They noted that there were fewer job opportunities and less work available since
the recession. Some participants worked in the public sector, and were very conscious of spending
cuts in recent years. Several individuals commented that they had noticed the value of money
declining in real terms, over the past few years.
12 Attitudes to financial decision making

‘[I feel] terrible [about our finances]. It could be better obviously because my husband is not
working … It’s difficult. Food seems to have increased and everything seems to be going up, and
I only work a part-time job. They can’t offer me a full-time job where I am [at a primary school].’
(Charlotte, 30s, North West)

2.2 How couples go about decision making

Overall, couples agreed that financial decision making was a collaborative process, and that there
was a ‘usual’ way for them to go about it. A typical pattern emerged across all 24 couples in the way
that the partners interacted to make a financial decision, and in what instigated the decision making
initially: a trigger set off the decision-making process, the couple usually discussed the decision
several times, and eventually decided on an outcome.

2.2.1 Triggers to decision making

Identifying the need for a financial decision was typically in response to something specific that one
or both partners witnessed or experienced: a trigger.

One type of trigger, mentioned relatively frequently, was a significant life event, such as a birth,
death or illnesses. These reminded people of their fallibility and mortality, and were relatively
powerful triggers: individuals who had experienced them had often taken financial decisions as a
direct consequence. As Section 2.1 discussed, becoming parents tended to bring a significant sense
of financial responsibility. Some new parents expressed intentions to buy life insurance, for example.
The financial aspects of these decisions – the cost of a financial product or the change to household
income, for example – were often a secondary focus. The experience of birth, death or illness,
either personally or by someone close, was the primary issue, tending to evoke a response that was
emotional in nature.
‘My brother died last August. Luckily, he had had a policy that he had kept running so that paid
for his funeral. That made me think, “If I left this lot and I didn’t have insurance, it wouldn’t be
a nice thing to leave people, to have to bury myself.”’
(Darren, 40s, North West)

‘We made the decision for me to reduce my working hours when Pete had his stroke. Our income
reduced by £300 each month. […] I’m the breadwinner now, so I have got to be able to work
and […] when I come home I have got to cope with Pete.’
(Siobhan, 50s, North West)

Purely financial triggers were mentioned less frequently. These involved changes to couples’ financial
circumstances, resulting in their having more or less money available to spend. Financial triggers
tended to evoke a less emotional reaction than life triggers, and decision making in response to
them was generally described in more matter-of-fact terms than those made in response to life
triggers. Examples of financial triggers included inheritance, maturing investments, and new working
arrangements that resulted in palpable increases or decreases to individuals’ salaries.
‘Ralph had an endowment policy mature, and it was a case of what to do with the money.
That was when we decided to get a buy-to-let property.’
(Hannah, 40s, Midlands)
 Attitudes to financial decision making 13

2.2.2 The process itself

Couples made it clear that discussions do almost always take place when they make significant
financial decisions. Although there were isolated cases where one partner took charge of a particular
type of financial decision independently, no couple described their typical decision-making process
as involving one partner exclusively, without some kind of agreement.
‘We talk about it, like, “I’m going to buy a van”. It’s not just, “Surprise!”’
(Cara, 20s, North West)

‘We do discuss everything. Smaller things, I would tend to take the lead and I would run it by
him and if he is fine with it then I will deal with it.’
(Jade, 20s, North East)

Most people defined a ‘significant’ financial decision as one that involved a substantial amount of
money. Interpretations of ‘substantial’ varied according to couples’ level of wealth and income. A
few offered alternative definitions of ‘significant’ in the context of financial decisions, for example,
decisions that necessitated saving up money, or meant taking out a loan in order to pay for
something.

Figure 2.1 below provides a visual representation of the typical form that discussions took as couples
made a significant financial decision.

Figure 2.1 Typical form of discussion during the decision-making process

Start A number of Final decision

discusions

One partner Building momentum Described as ‘collaborative’

Trigger more likely until both partners are although one partner usually
to instigate engaged more involved

Background influences:
• Attitudes to household finances
• Financial constraints (or lack thereof)
• General economic climate

Decision making was often instigated by a trigger, which caused one partner to identify the need
to decide on a course of action. At this point, it was common for only one partner to have engaged
seriously with the idea.
‘Zara lost her Dad, and that was the point at which she said, “I’m going to have some money
coming in, so maybe we could [buy a house] together.”’
(Niall, 30s, South East)

It was usual for couples to return to the issue under discussion several times before reaching a
decision. With each discussion, momentum increased until both partners were engaged, and
14 Attitudes to financial decision making

each recognised the need to make a decision. However, engagement could vary between the two
partners, with one partner generally more interested and involved in the decision than the other.
‘He lets it in one ear and out the other. I talk to him and it’s like he’s not listening, sometimes.
I do say it’s for the benefit of the house and it’s going to be worth making [the decision].
Eventually we come to an understanding.’
(Charlotte, 30s, North West)

Some couples described decisions that were discussed more than once, but postponed to an
unspecified point in the future, or dropped completely without action being decided. For example,
when Barry was too ill to work, he and his wife Hailey had discussed the possibility of renting
out Barry’s black cab to another driver. After a few conversations and some thought, they had
decided against this, partly because of the tax they said they would have had to pay on the income
generated by hiring out the cab.

Regardless of the degree to which they had been active or involved in identifying the need for a
decision, or in the ensuing discussions, all of the couples interviewed described their typical decision
making as collaborative. However, examining the process they describe in detail suggests that the
process as a whole did not necessarily entail shared input. It was only really at the final stage, where
the outcome is decided, that both partners were involved collaboratively.
‘We will come together to make the decision. Probably about 90 to 95 per cent of the time, the
actual decision is a joint decision.’
(Ryan, 30s, South East)

In addition, background influences often affected whether a decision was made at all, how and
what was decided. The way that each partner felt about handling the household finances, and
constraints the couple were under, including the wider financial climate, influenced the degree to
which individuals were involved in a decision, or the perspective from which they approached it.

2.3 Roles played in the decision-making process

Most couples included one partner who was more active in the decision-making process, and
another who was comparatively reactive, or passive. In referring to these two types, we use the
labels ‘alpha’ and ‘beta’ roles respectively.

Similarly, broad themes emerged in the roles and responsibilities that men and women fulfilled.
This section discusses alpha and beta roles, as well as the tasks typically undertaken by male and
female partners.

2.3.1 Alpha and beta roles

Alpha partners took the most responsibility for household finances. In general, this person was more
closely involved in the day-to-day running of the home than their partner, and by extension, closer
to the household bills and used to dealing with them. Alpha partners usually referred to a range
of sources when they needed financial information or advice, and were the more likely to have a
relationship with a professional financial adviser.
‘I think I’m more confident … He’s quite laid back. He probably wouldn’t do anything. [If it was
up to him to decide] We wouldn’t have a holiday. We wouldn’t have a car. We’d just sit in the
house all day.’
(Kelly, 20s, North East)
 Attitudes to financial decision making 15

With some couples, there was a sense that the handling of financial income and outgoings had
given the alpha partner a degree of financial confidence, relative to their partner. In spite of this
confidence, alpha partners tended to say that they felt stressed by managing the household
finances, and perhaps as a consequence, the majority thought of themselves as savers, rather
than spenders. Overall, they were more long-term in their thinking than their beta counterparts.

With their partners taking a greater degree of control, those fulfilling the beta role took on less
financial responsibility, and were reluctant to increase this. Some in beta roles explained that
they were away from the couple’s home more often than their partners because of their working
arrangements, while others were explicit about their lack of interest, or even their laziness.
‘She’s the boss […] I don’t mind it really. Sometimes I don’t like it, but she does a good job.’
(William, 30s, South East)

In general, these individuals had less financial confidence than their alpha partner. Several beta
partners described a specific financial responsibility, such as car insurance, or small purchases for the
home, that suggested they had a well-defined comfort zone. Beta partners were often more inclined
to spend money than to save it, usually short-termist in their financial thinking and, compared with
the alpha partners, relatively relaxed about the household finances. If they consulted sources of
financial advice, these were often informal sources, such as friends, family and colleagues.

There was a gender pattern, with women somewhat more likely to be the alpha partner, and men
the beta partner; this is reflected in how both partners approach the financial decision-making
process, which we will explore in Section 2.3.2. Our interviews with two same-sex couples indicate
that in these households, the same roles emerged, with one partner demonstrating typically ‘alpha’
behaviours and the other partner showing ‘beta’ behaviours.

The more the alpha partners took charge of the household finances, the more entrenched this
behaviour became for these individuals, causing them to ‘stay close’ and continue to scrutinise the
couple’s circumstances, their incomings and outgoings. This allowed the beta partners to keep their
distance from the household’s finances: none indicated that they would like a greater degree of
involvement, and all seemed happy to allow their partner to continue in the alpha role.

2.3.2 Male and female roles

Independent of the alpha and beta roles described in Section 2.3.1 above, men and women tended
to take on specific tasks and responsibilities as they went about the decision-making process. Figure
2.2 maps typical tasks performed by men and women. The size of the gender symbol at each stage
represents the relative importance of each partner’s role in each task, in a male-female couple.
16 Attitudes to financial decision making

Figure 2.2 Example of male and female roles in the decision-making process

Initial Options presented

Research Final decision
discussion and discussed
Decision

The death of a family The woman carries If she cannot find The male partner
member prompts the out research into a product she is may now veto the
woman to realise she life insurance willing to buy, she decision, e.g. if he
would want her children policies using a may now veto the does not like any of
to be provided for, if she price comparison decision and the options to have
or her partner were to site, and mentions decide against emerged from the
die. She mentions this to the plan to friends taking out life research.
her partner and after a at work. insurance at all. Both partners are
couple of brief If she has involved in the final
discussions, they agree identified some discussion(s) and
to investigate life viable options, the feel that they
insurance products. woman presents contribute to it
them to her collaboratively.
partner.

Most couples explained that women usually raised an issue for discussion, often, as noted, in
response to a specific trigger. The initial discussion concluded, the next stage that couples described
was a research period, in which one partner – again, often the woman – conducted research into the
different options available.
‘Normally, it’s a proper sit down and do some homework. It is on my part, anyway. He might
throw in some random guesses, but I prefer something a little more concrete to work with.’
(Abbey, 40s, South East)

The length of time and amount of effort devoted to the research varied between couples, but was
most often conducted online or via informal sources such as friends and family. If the research did
not reveal viable options, there was scope for the woman to postpone the decision, or to decide on
the couple’s behalf that they would not go ahead. For example, Siobhan explained that her husband
Pete had raised the idea of buying a new porch, but after some research she had realised that it
would not work feasibly on their house, and decided not to go ahead.
‘Pete will say, “I’ve always fancied having a porch. Shall we have one?” I weigh it up and I like
the one that belongs to number 29 on another road, but it’s not feasible. He has the fantasy
ideas where I have the more practical ones, so mine always win.’
(Siobhan, 50s, North West)

Provided the woman had identified some possibilities through her research, she would now present
them to her partner for discussion. Couples described that either at the point where the options
were discussed, or at some later date, they would settle together on a final decision. In most cases,
both partners were clear that they had contributed equally to this final part of the process.
 Attitudes to financial decision making 17

To summarise, women tended to have more influence across the decision-making process, and were
often behind its instigation. Men’s reported involvement varied, although most felt that they had an
integral role at the final stage.

Lastly, individual income did not appear to influence the tasks that partners undertook, or their level
of influence: that one partner earned significantly more than the other, did not necessarily mean
they had more influence on the decision-making process, or its outcome.
18 Decision-making typologies

3 Decision-making typologies
One aim of the research was to identify any emerging decision-making typologies for couples,
describing groups of couples with similar characteristics. This chapter describes the process for
identifying groups within the couples who took part in the research, and goes on to discuss these
groups in turn.

3.1 Creating typologies

In order to identify groups with similar behaviour within the 24 couples, we created several matrices
based on the emotions that participants typically exhibited – to greater or lesser extents – when
discussing financial decision making. Because financial confidence and emotional factors were
drivers of behaviour, we decided that ‘daunted’ versus ‘confident’ were the most suitable emotions
for the x-axis, and ‘relaxed’ versus ‘stressed’ for the y-axis. We assigned each participant a position
on the matrix, before linking partners together.

Figure 3.1 Defining a typology for couples’ behaviour

MarcusLaura Unbalanced Relaxed

William Responsibility
Organised
Michael Niall Callum Aspirational
Ryan
Tim Ralph Simon
Zara Pete

Luke Mark
Edith Sally Steve Joanna
Malcolm Michel
Daunted Stephen Confident
Darren
Sara Abbey Kelly
Miles Naomi
Jodie Barry AaronMathewJack
Sharon Caitlin Hannah Siobhan Kieran Jenny
Dawn Adrian Cara
Danielle Hailey Jillian Jade
Debbie

Reena
Cautious and
Content Charlotte
Stressed

The shaded areas in Figure 3.1 indicate the three broad types of household decision making that
emerged from the matrix exercise. A noticeable majority of women are more ‘stressed’ than
‘relaxed’, with the opposite holding true for male partners. There is no gender pattern for level
of confidence, with both male and female partners populating opposite ends of the spectrum.
 Decision-making typologies 19

The following sections explain in detail the characteristics and tendencies of couples within each
type, including the way they go about decision making.

3.2 Type 1: Unbalanced Responsibility

Couples in the Unbalanced Responsibility group tended to comprise an alpha partner – often a
woman – with a high level of financial control and responsibility relative to the other person in the
relationship. The alpha partners frequently mentioned the need to rein in their partners, in order to
protect the household finances. Many couples in this group were relatively young, in their 20s or 30s.

3.2.1 Decision-making dynamics

The alpha partners in the Unbalanced Responsibility group were generally in control of the
household finances. It was not uncommon to find partners who enjoyed being in control; others
assumed a more controlling role out of necessity, to curb some of their partner’s less well-controlled
financial behaviour or because their input was needed in order for relatively basic financial actions to
be taken. Overall, the alpha partners felt comfortable managing the household finances.
‘I think that’s what [William] thinks as well, “Don’t worry, Caitlin will deal with it.”’
(Caitlin, 30s, South East)

When couples in this group had to make significant financial decisions, it was typically the alpha
partner who would raise the issue and be more actively involved in the decision-making process.
While the final decision tended to be agreed upon jointly, the alpha partner usually had greater
‘ownership’ of the decision and was often only seeking agreement from their partner to go ahead
with their initial idea.

Alpha partners tended to come across as more worldly in their outlook. Often this was linked to
past experiences: family background and upbringing emerged as particularly strong influences on
financial attitudes and behaviour among couples in this group.
‘I think it’s because my husband came from a background where his father was financially
stable and I didn’t. I came from a background where we lived day-to-day. My mum brought us
up. So that is the way I am now. I don’t just make decisions. I am careful to think, “What if that
happened? What if this happened?” Whereas he is, “No, no, we will go for it. It is going to work”
and he seems to be more laid back than I am.’
(Charlotte, 30s, North West)

The beta partners in this group were generally relaxed about the household finances but professed
to not being financially savvy, at least relative to their partners. They typically appeared less realistic
than the alpha partner about what they could achieve and what they could afford. They tended to
be spenders rather than savers, engendering a feeling among alpha partners that they should exert
more control over their partners financially, for the sake of the household finances.
‘[He might] go out for a meal or something. If we had £50 on the table, that would be his
decision, whereas mine would be, “Let’s pay a bill.”’
(Caitlin, 20s, South East)

Many beta partners in this group dedicated their efforts to following their dreams, and largely
deferred to their partners on important financial matters. They commonly rejected responsibility,
either citing ‘laziness’ or a lack of time as reasons for doing so.
20 Decision-making typologies

‘Because I have a busy working lifestyle I normally leave it to my partner to deal with all the
finances. My wage comes in and I don’t have to deal with all the expenses and everything else
which goes with it.’
(Ralph, 40s, Midlands)

Beta partners were generally happy to assume responsibility for certain small financial decisions,
within their own defined ‘comfort zone’ – examples of this included car insurance and pet insurance.

3.2.2 Attitudes towards retirement planning

Couples in the Unbalanced Responsibility group typically had only limited, if any, provision in place
for retirement. The alpha partners were more likely to have started, or at least thought about,
retirement provision than the beta partners. While alpha partners contributing to a pension scheme
could often relay key details, such as the level that they contributed, beta partners did not fully
understand how their pensions worked.
‘I still don’t know about it really. I think £5 a week comes off my wages and I am not sure where
it goes or what happens to it. I am a bit naive about that.’
(Luke, 20s, North East)

Many couples in this group were relatively young, and had not yet begun, or had just begun, to think
about saving for retirement.
‘At the moment I feel that life is beginning. I was a student and in fashion it’s quite difficult to
get a job … [I have not put any retirement provision into place] because it is somewhere where
you need to have a starting point.’
(Marcus, 30s, South East)

Another barrier to retirement planning for these couples was the relatively big difference between
alpha and beta partners in their respective levels of household financial responsibility. For active
planning to take place, the onus would often be on the alpha partner to initiate discussion about
the topic, and propel the process forward.
‘[I will say] “I think we should start talking about pensions,” “Yes, yes, yes, I am watching this
programme.” It doesn’t last that long. It might be something just because I have received a
statement and I might say, “This has happened, what do you think?” and, “We really ought to
do something about it” and then it just doesn’t happen.’
(Abbey, 40s, South East)

One or two of the alpha partners remarked that they wished their partner would be more proactive
and to take more of an interest in this type of decision making; they did not necessarily want to plan
so far into the future alone.
‘[Planning for retirement] is something I can’t do on my own. I can do everything – the shopping
and the bills – but when it comes to that [retirement planning], I think we need to pull together.’
(Dawn, 30s, Midlands)

As Section 4.2.5 will discuss, some couples in this group said that they distrusted the government,
and suggested that regardless of changes made today, government pension policy would only
continue to change in the future.
 Decision-making typologies 21

‘I want to retire early but the likelihood is that it is not going to happen because the goalposts
have all moved.’
(Abbey, 40s, South East)

3.2.3 Defining characteristics

The Unbalanced Responsibility segment is characterised as follows:
• there is a dominant alpha partner, usually a woman, who is more ‘worldly’ in her outlook than the
beta partner;
• beta partners are relatively disengaged from household finances and financial decision making;
• the alpha partner has more ownership of the decision-making process overall, and is much more
active than the beta partner in taking a decision forward from inception to action;
• alpha partners were more likely to have begun, or at least considered, making provision for
retirement, than beta partners.

3.2.4 Case study: Cara and Tim

Cara and Tim are in their early 20s and live in the North West. Earlier this year they decided to
buy a house together. Cara left university a year ago and has started her first job in the NHS as a
support worker, but wants to become a psychologist eventually and plans on earning much more
in the future than she does now. She sees herself as being at the beginning of her career. Tim has
worked as a builder since leaving school, but has recently been promoted and is now earning a
higher salary than Cara. Cara usually manages all household bills and informs Tim how much he
needs to pay her each month towards each bill.

Cara admits that she used to be a ‘spender’ when she was at university, but has since become
more sensible. She describes herself as ‘bossy’ and enjoys being in control of their finances.
‘I am quite paranoid about finance. I don’t like being in debt. I don’t like owing money. It
stresses me out. […] I basically do everything for Tim. I pay everything and then I tell Tim what
he has to give me for his share.’
(Cara)

Tim also says he used to be less inclined to save but has started saving more in the last two years.
He admits that he leaves most of the financial organisation to Cara.
‘I didn’t [get involved with the process of moving house]. Cara does all that. I want to move
house but I won’t do anything about it. I always say that I am more busy at work but I am not
really because Cara works now.’
(Tim)

‘Cara normally sets it out and organises the money more. She just says what we need to put
money away for and all that kind of thing.’
(Tim)
22 Decision-making typologies

3.2.4 Continued

When this couple have to make significant decisions, it is Cara who tends to raise the issue, and
then continually brings it up in conversation, developing the subject to find a solution they both
agree on. Cara typically does all of the research, and presents what she feels are the best options
to Tim for discussion. Unusually, when they made their most recent significant decision – to buy
their first home – it was Tim who introduced the idea, after complaining about paying rent to
Cara’s mother.
‘He did when I showed him. He is really lazy. He doesn’t do anything. He will just wait for me to
do it. Then I do it, show Tim what the best one is and what we would be paying monthly and
he agrees, and I do it, usually.’
(Cara)

They report that the final decision is a joint one, although Tim is simply agreeing with an option
Cara has already identified as the best one.
‘I just go along with everything unless I don’t agree with something.’
(Tim)

Both Cara and Tim feel that retirement is a long way off – too far away to consider at present. They
find it very difficult to imagine themselves or their lives in 20 years’ time.
‘I have not even been working full-time for a year and to be thinking about when I stop work,
what? It seems madness.’
(Cara)

Cara has an NHS workplace pension which she was offered through her job. She talked to friends
and family and asked them for advice before joining the scheme.

3.3 Type 2: Cautious and Content

Couples in the Cautious and Content group tended to be older than those in the other two, owning
their homes outright or being close to doing so. Most had grown-up children; some also had
grandchildren. Couples in this group were generally careful with money, and stressed the importance
of not exceeding their limits. Their ambitions were typically tempered by what they thought they
could afford. The majority were uneasy about using credit, preferring to spend only what they had.
‘I think it is quite important to meet your commitments and pay for what you have as you go
along. I am not a big borrower. If we have something, I pay for it, and that’s the way we’ve
always been.’
(Darren, 40s, North West)

Couples in this group reported being quite comfortable managing their household finances. They
were not necessarily in strong financial positions, but felt they had matters under control.
‘It [managing finances] doesn’t worry me. I am quite happy paying bills, looking at savings,
looking at your outgoings, your in-goings, your internet accounts, savings, rates, looking at
pensions, looking at any type of saving schemes such as ISAs. I am quite comfortable with
the terms and what they all mean, generally.’
(Steve, 40s, Midlands)
 Decision-making typologies 23

3.3.1 Decision-making dynamics

Couples in the Cautious and Content group generally conformed to traditional gender roles in the
home, with male partners typically being the ‘breadwinners’ or main earners, and female partners
being homemakers, or in paid employment with a lower income than their partner. Correspondingly,
men tended to be the alpha partner and women the beta partner within the couple, making this
group the exception of the three.

Alpha partners in this group were fairly confident about managing household finances, and often
took control of a very significant proportion of it. They were realistic about what they could achieve
through household budgeting: examples of this were committing to a mortgage that they could still
afford should one partner stop earning, and budgeting carefully for bills and groceries.

Beta partners were typically women who trusted their partners to handle the bulk of their finances.
Some had their own small area of responsibility, for example purchases for the home or the children,
or small-scale insurance products.
‘Steve looks after the bills and I pay for nice things like holidays and birthday parties,
birthday presents.’
(Sally, 40s, Midlands)

The beta partners in this group were split between those who were quite daunted by financial
matters, and those who were not as confident as their partners but happy to weigh in on financial
decisions. The latter group would take on a significant role in the decision-making process by actively
researching issues at the centre of financial decisions.

3.3.2 Attitudes towards retirement planning

Cautious and Content couples typically had some form of provision in place for retirement, although
alpha partners were likely to have more comprehensive provision than their beta partner. For
example Stephen’s pension was more comprehensive than that of his partner Sharon, who appeared
to have misunderstood her arrangements, explaining in turn that her workplace pension would pay
out one-eightieth of her final salary.

Many couples in this group were in the older age groups, but had only recently begun planning for
their retirement, or were still looking to put plans in place. Several couples worried that the provision
they had would not suffice, and voiced intentions to contribute more in the future.
‘I know it [my pension provision] is not enough. It does lurk at the back of my mind that it is not
really enough. If I had to retire in a year’s time then I think I would be struggling.’
(Mathew, 60s, South East)

Couples’ actions in organising provision tended to be triggered by life events rather than happening
spontaneously: engagement with retirement planning was typically reactive rather than proactive.
In some cases, retirement plans were triggered by changes made to a workplace pension by the
individual’s employer. In these instances, the risk of losing provision, or having provision reduced
had made the topic of retirement planning front-of-mind.
‘I have a company pension and I have got my own private pension as well. When my son was
born I took a pension out for him … Steve said it was a good idea.’
(Sally, 40s, Midlands)
24 Decision-making typologies

‘My pension at work is changing which I think initiated us looking at pensions … So we have not
made any decisions as such but we are fairly aware that we are going to have to in the next
few years.’
(Danielle, 40s, North West)

Even if they had concerns about their retirement; some people admitted to having their ‘head in the
sand’. For example, Hailey had learned after a few years in a previous job that the proportion of her
final salary paid out by the company’s defined benefit (DB) scheme would be reduced by two-thirds
from the proportion she had been promised initially. She had made no further plans to supplement
that pension scheme. Mathew explained that he had a defined contribution (DC) scheme through his
employer, but felt that he had started contributions quite late in life. However, he had not made any
plans to increase his contributions or organised a supplementary source of retirement income.

For beta partners, lack of engagement was in some cases reinforced by reliance on their alpha
partner, and the underlying expectation for the alpha partner to organise provision on their
behalf. This reliance was generally extended from existing dynamics within their relationship, and
specifically from their approach to household finances. Beta partners, who often relied on their
alpha partner to provide the majority of the household income, tended to adopt the same reliance
in relation to retirement planning. Mathew’s wife Debbie had made no provision for retirement, and
although she regretted this, she had not made any alternative plans and expected to depend on
Mathew to a large extent, as well as the state pension.
‘I find it [the thought of retiring] quite frightening actually because I haven’t got a private
pension and I could kick myself that I have never organised it.’
(Debbie 50s, South East)

One or two of the couples in the Cautious and Content group also mentioned more immediate
financial priorities that they deemed more urgent than retirement planning, such as paying
their children’s university fees. In these cases, the couples envisaged that discussions regarding
retirement would be revisited after these priorities had been dealt with. Even at this relatively late
stage in the life course, retirement planning had been sacrificed to other emerging priorities.
‘Things [planning for retirement] have kind of stopped because we are very aware that we may
have two children at university in the next year or so. We haven’t done anything really.
It [retirement planning] will probably be revisited once they get through [university].’
(Danielle, 40s, North West)

3.3.3 Defining characteristics

Couples in the Cautious and Content group can be summarised as follows:
• there is a dominant alpha partner, usually a man, who plays the traditional ‘breadwinner’ role in
the relationship;
• Cautious and Content beta partners usually fulfil the traditional ‘homemaker’ role;
• beta partners are mostly disengaged from long-term household finances, but may lead small
decisions, such as purchases for the home or children;
• the beta partner may carry out research but the alpha partner generally takes a much more
active role in significant financial decisions, and may even take action without consulting the
beta partner;
• both partners tend to have some provision for retirement in place, but alpha partners often have
more comprehensive arrangements than beta partners.
 Decision-making typologies 25

3.3.4 Case study: Debbie and Mathew

Debbie is in her early 50s and Mathew is in his early 60s. They live on the outskirts of London. They
have not made any significant decisions in the last few years. Mathew works in the healthcare
industry as a consultant and earns a high salary; Debbie is a part-time florist, earning a significantly
lower salary than her husband.

Mathew is ‘conservative by nature’ and takes charge of their longer-term financial planning. He will
often act quite independently in making these plans, preferring not to ‘burden’ Debbie or ‘worry
her that I am about to die’. Debbie does not believe that she has the capability to make complex
financial decisions. She has a well-defined comfort zone limited to product insurance
and purchases for their home.
‘Some investments, your money is tied in which I find is quite frightening. It doesn’t seem to
be relayed in layman’s terms. It’s all a bit confusing.’
(Debbie)

‘I struggle a bit with complex finance, things like life insurance and pensions and the like but
just day-to-day management is not a problem. That’s fine.’
(Mathew)

When the couple have to make everyday decisions regarding their home, holidays or smaller
purchases, Debbie tends to have an idea and raise it for discussion. Her first step is to ask Mathew
whether they can afford it. Effectively this is the point where he signs off the decision. Debbie then
does all of the research and tends to make the final decision herself, assuming that Mathew will not
be interested. However, for long-term decisions (e.g. about their savings) Debbie trusts Mathew to
make the best decision and generally isn’t involved. Mathew effectively makes these decisions alone.
‘If it’s something in the house, I think I’d probably have the final say. He would have the say on
the spending, but I would probably have the say on what it would be.’
(Debbie)

‘I suppose I would tend to make the financial decision but I would leave all the design and
research to her. I suppose that is how it normally goes really.’
(Mathew)

Mathew began making contributions to a workplace pension when his employer arranged one for
him in his late 30s, but thinks that its value is poor because of the financial climate. He now thinks
he may have to work into his seventies until it will provide a reasonable income. Debbie has no
pension provision and has recently become concerned by this. With Mathew’s help, she applied for
a State Pension Forecast. She expects to depend on Mathew in her retirement.
‘I will probably be working until I am 120 anyway so it is not going to make any difference!’
(Mathew)

Other family members have downsized, and the couple state this as a possible source of income,
although Debbie finds the idea upsetting.
‘I know it’s only bricks and mortar, but I’m very emotionally attached to it.’
(Debbie)
26 Decision-making typologies

3.4 Type 3: Organised Aspirational

Couples in the Organised Aspirational group were a mix of ages from 20s to 50s. They also varied
in terms of income and affluence. Couples in this group were generally confident, but careful with
money. Typically, they described themselves as cautious, but implied that they trusted in their own
judgement. It was unusual for these couples to have experienced major financial problems and
consequently they had not been ‘burned’ by negative experiences.
‘I’m always trying to put money away. Not that I am always successful with it, but I’ve got
the intention. It’s just to make sure I know exactly what is going out, especially since I started
working for myself.’
(Ryan, 30s, South East)

The individuals in each couple were more similar to one another in their approach to finances than
individuals in other groups were. However, there were still differences between the two partners,
with individuals fulfilling alpha and beta roles. In this group the alpha partner had generally gained
their financial confidence through fulfilling a typical ‘researcher’ role. The beta partners in this
group were typically more relaxed about finance, and often seemed to have quite entrepreneurial
mindsets.
‘Quite confident [with managing finances]. We do all right. I am very, very careful, although
I do have moments where I throw caution to the wind and have a bit of a splurge, but it’s not
very often.’
(Jenny, 30s, North East)

Beta partners in the Organised Aspirational group generally differed from the beta partners in other
groups. Organised Aspirational beta partners tended to be equally capable of fulfilling the alpha role,
but chose not to. They indicated a better awareness of what they could realistically afford out of
their budget as a household than beta partners in the other two groups. Beta partners in this group
were not reliant on their partners through a lack of financial awareness or capability, as was the case
in the other two groups, but were noticeably less engaged and more relaxed about the household
finances than their partner was.

3.4.1 Decision-making dynamics

Everyday financial decision making tended to be led by the alpha partner, who was responsible
for monitoring household income and outgoings within the couple. These individuals tended to
be closer to the household bills than the beta partner. Alpha partners tended to feel confident in
making decisions about household finances, but were cautious with money. In most cases the
alpha partners tended to be more inclined to save than spend their money.

A similar pattern tended to emerge when these couples made a significant financial decision. It
was typically the alpha partner who would actively lead the decision-making process by raising the
subject and then researching options. The couple would then discuss the options together and come
to a final decision jointly. After a final decision had been reached, it was typically the alpha partner
who was responsible for putting this final decision into action. In some cases the alpha partner
reported initiating the research phase even before raising the issue with their partner and involving
them in the process.

Beta partners in the Organised Aspirational group mentioned barriers to involving themselves in the
decision-making process that were similar to those mentioned by beta partners in the Unbalanced
Responsibility group. They tended to allow their alpha partners to lead the process, reporting a
disinterest for it, ‘laziness’, or felt that they could ‘take a back seat’ because they knew their partner
would ensure the issue would be resolved.
 Decision-making typologies 27

‘It is usually her [who takes the lead]. I just get the day over with and just sit and watch the TV
or something like that.’
(Simon, 40s, North East)

Similarly to the other groups, the way Organised Aspirational couples approached decision making
was strongly influenced by family background and upbringing. Couples implied that their parents
had had a direct impact on their attitudes to managing finances.
‘I guess my job is quite entrepreneurial. I want to work for myself eventually. My dad has got his
own business and I find it more interesting to save money to have a house and investment, save
money so I can have a business or another one or something like that afterwards.’
(Steve, 20s, South East)

3.4.2 Attitudes towards retirement planning

Typically in this group, at least one individual within the couple had a non-state pension and this
tended to be a workplace pension. For example, Kelly was a member of an NHS scheme and her
husband Simon a member of a well-known private sector employer’s scheme.

For most of those with workplace pensions, the decision to join the scheme had been triggered by
the individual’s employer. Many did not actively seek to join a pension scheme but were offered it by
their employer. There were a couple of exceptions to this pattern. Callum’s actions in organising his
retirement provision had been triggered by receiving a pension forecast and deciding that it was too
low; he was not prompted by his employer as other individuals in this group were.
‘I think there was a deal [at work] where you sign up for a pension and they match whatever
you are putting in.’
(Kieran, 20s, North East)

Attitudes to retirement planning differed in the Organised Aspirational group compared to the other
two groups. Organised Aspirational couples tended to voice the importance of retirement planning
rather than rationalising their own inertia to organise provision for themselves. Couples in this group
were impacted by inertia to the same degree as those in the others, but tended to rationalise this
inertia less, and to express a more responsible outlook. However, despite recognising the importance
of pension provision, those without provision had still not been motivated enough to make
alternative retirement plans.
‘Once I do stop working, once I do stop having a regular income coming in, I need to make sure
that myself and the family [are looked after] as much as possible.’
(Sarah, 30s, South East)

Among younger couples there was a strong sense that day-to-day life came first, and that
irrespective of any other barriers, this was getting in the way of retirement planning. As Section
4.1.1 will discuss, they also implied that they had already dealt with retirement planning by joining a
workplace pension, and did not therefore need to explore it any further for the time being.
‘We know it is going to come so we just try and put it on the back burner and ignore it. We took
action for that to happen so I don’t feel as though I need to talk about it just yet.’
(Callum, 30s, North East)
28 Decision-making typologies

3.4.3 Defining characteristics

The Organised Aspirational group is characterised by the following features:
• One partner plays an alpha role and the other a beta role, but the two individuals tend to be more
similar to each other in their approach to finances, than partners in the other two groups are.
• Alpha partners are usually women, and carry out a typical ‘researcher’ role.
• Beta partners tend to be quite relaxed about finances, but are capable of fulfilling the alpha role
if necessary.
• Alpha partners typically lead the decision-making process, however, beta partners usually become
involved in the final stages and contribute to the final decision.
• Couples in this group tend to recognise the importance of retirement planning, though younger
couples in particular are unlikely to have made any provision for retirement.

3.4.4 Case study: Ryan and Sarah

Ryan and Sarah are in their 30s, recently married and living in outer London with their son. Their
most recent significant decision was triggered by Ryan’s redundancy: they decided that Ryan
would try a career as a musician.

Ryan used to work in sales but is now working as a session musician and hoping to make a name
for himself in the music industry. Sarah has a temporary admin job with a housing association.
The couple see financial decisions as important and based on ‘teamwork’. They try to meet every
month to discuss their finances, sitting at the kitchen table to talk. While the household bills tend
to stay the same, they discuss the things they want, their goals. Both check their bank statements
‘on a daily basis’ and are always looking for ways to save money, using tools such as Money Saving
Expert. They are currently researching life insurance products, in order to provide for their son,
should anything happen to them.
‘Since we got married we sit down and try and have at least a monthly or a quarterly meeting.
I hate it. My wife Sarah, she likes to make sure that everything is covered.’
(Ryan)

When this couple make significant decisions it is typically Sarah who identifies a need, but Ryan
generally agrees with her. Sarah is then usually responsible for researching their options. Ryan
feels that Sarah is more capable of doing this than he is; he reports noticing advertisements and
being interested in managing their finances and making decisions, but admits to getting distracted
easily. Generally, the final decision is collaborative, although Sarah admits that she would prefer
Ryan to simply choose one of the options that she has already identified.
‘Any kind of major decisions, we always talk about it and consult on it. There is some stuff
where Ryan says, “Take charge and you don’t even need to ask me.”’
(Sarah)

‘She is amazing. She’s online, and like, 20 minutes later, it’s done.’
(Ryan)
 Decision-making typologies 29

3.4.4 Continued

Sarah has a frozen workplace pension from a previous job but is not contributing to a pension
currently. Ryan has no non-state pension provision and does not see a point where he will stop
working, if he manages to have a successful career in music. He hopes to have royalties and
investments to live off, if he does stop working.

Sarah feels she gives pensions and health insurance the most thought. She tries to have a long-
term plan, but feels that this is difficult. While they do not discuss pensions regularly, Sarah is
aware that with every year that passes, she has less time to plan for their retirement. However,
she feels that she has other priorities at the moment which must be dealt with first.
‘I can get quite anal about it. I try and have a long-term plan but it is a bit hard at the moment
financially. I am the one that is always thinking about pensions, thinking about health
insurance whilst also we are trying to manage the day-to-day stuff.’
(Sarah)
30 Retirement decision making

4 Retirement decision making

This chapter discusses the provision that individuals and couples had in place for retirement, and the
discussion and conscious decision making that had fed into these plans. It also identifies possible
barriers to engagement with retirement planning and different types of inertia, noting the relevance
of some of the principles of behavioural economics to pension planning. Finally, the chapter
discusses the three types’ likely reactions to automatic enrolment.

4.1 Plans in place for retirement

Most couples had only a vague vision of their life in retirement, and were not planning for it actively.
While some spoke about the sort of place where they would like to live and the way they might
spend their time, none talked spontaneously about the income they would have.

The couples we interviewed tended not to recognise decisions about pensions (for example,
deciding to increase or decrease the amounts they contributed to non-State pension schemes)
as being financially ‘significant’ to them. These decisions were not generally associated with
household finances in the same way as taking out an investment, or buying a financial product like
income protection or life insurance. In some cases, couples only recalled these decisions when the
interviewer asked about them directly.

4.1.1 Saving into a workplace pension

In most couples at least one partner had some kind of non-state pension provision. This was usually
in the form of a workplace pension. There were indications that workplace pensions were seen as
something of a ‘safety net’, in that they allowed people to feel they could relax. Once contributing
something to a pension, there were indications that people assumed they did not need to engage
further with retirement planning. None of those who were members of workplace schemes had
investigated or taken out an individual personal pension independently of their workplace scheme.
‘I thought it would be better all round if I did it [joined his workplace scheme]. They gave you a
package. A lot of people [at work] said it was a decent one.’
(Callum, 30s, North East)

In some cases, however, individuals had not felt that their workplace pension was good enough.
For example, Jade had pulled out of a workplace pension when she became disillusioned with the
provider, but had not yet got around to making alternative savings arrangements.
‘It wasn’t very good and they messed around a bit, so I pulled out. They weren’t ringing me
about stuff, and they weren’t getting back to me when I was asking them questions about it.
A few from work pulled out and I haven’t thought about it since.’
(Jade, 20s, North East)

Some individuals had been members of DB schemes, and where this was the case, alpha partners
in particular tended to be more aware of how much they had contributed, and how much they
expected to receive as income, than those in DC schemes. This was often the case even when
individuals did not have a high level of financial knowledge or confidence: they were still able
to remember the broad terms of the arrangement and, typically, what had happened to these
schemes – even when the detail they could provide was sometimes vague.
 Retirement decision making 31

Hailey: ‘Everybody had to belong to the pension scheme which was terrific because it was an
end salary scheme. In 1981, after I had been in it for about five years … we all had to
rejoin the scheme. They were doing away with the end salary pensions. There were five
of us ladies who were holding out. Not the men, who didn’t have to sign, it was only the
women.’
Barry: ‘They kept changing the width of the field, the goal posts. [Hailey] was in a final salary
situation where it was 1/25 of her final salary. We got a letter one day addressed to
me, on behalf of her, saying that, “If anything happened to your wife she would be
worth to you £109,000.” They brought it down to 1/75 of her salary.’
(Hailey and Barry, 60s, South East)

Whether they were contributing to non-state pensions or not, most couples anticipated living off
shared pension income in retirement. However, awareness of what the retirement income would
add up to was typically low or non-existent.

In a small number of cases, one partner was contributing to a pension or investment that the other
did not know about. In no case did this appear to be because one partner was concealing their
actions from their partner. With younger couples, this was sometimes because they had begun
saving before meeting their partner. More often, however, the couple had simply never discussed
these savings.
Aaron: ‘I started the pension six months ago. I’ve got a few ISAs.’
Joanna: ‘You’ve got ISAs? See, we don’t talk!’
(Joanna, 20s, and Aaron, 30s, Midlands)

4.1.2 No provision for retirement

Only a handful of people had arranged non-state private pension provision other than a workplace
pension. Those who had tended to be self-employed, and to have been made aware by a financial
adviser that getting one in place was prudent.

It was far more typical, however, for people to present justifications for not having made provision
for retirement. It was common for them to state that they would continue to work for as long as
their health allowed, for example, and to say they were unable to visualise life without work. They
also mentioned plans to downsize to smaller houses and invest or live from the proceeds of the
sale, to rent out their current home and live off the rent, or, less commonly, to acquire one or more
buy-to-let properties closer to retirement. The majority of these justifications for delaying retirement
plans tended to be post-hoc, and in a sense reactive to being asked directly about their plans, rather
than an explanation of a rationale they had reached prior to the interview. The exception to this
trend was those who mentioned buying to let, specifically to provide for retirement. Some couples
also expressed a preference for investing in other vehicles than pensions, and were already doing so,
or planned to in the future.
‘In terms of pension, I can see Marcus more being interested in investment. I will probably go for
a pension. So, having a large property, if we need capital then we could sell that large property, to
then go into a lower property, or to have multiple properties, to then be able to let it out or sell.’
(Miles, 40s, South East)

The research included a broad mix of couples, in different situations. Some participants were
perhaps several decades away from retirement and consequently had not given much consideration
32 Retirement decision making

to pensions. There was a general sense among individuals that they would arrange some kind of
provision, ‘further down the line.’ However, typically they did not know how they would go about
this, or the sources of information they might consult.
‘If I get a job like that [as a barrister] and I can earn a decent amount of money, I will be able to
just shovel a bit part of that into an accelerated pension fund. At the moment there’s nothing I
can do.’
(Laura, 30s, South East)

4.2 Inhibitors to retirement planning

The research indicated that the forces inhibiting retirement planning can be emotional or material,
and that they can be linked to the anticipated consequences of decision making, other priorities
that the couple have, or their general feelings about finances. Collectively, inhibitors often result in
pensions occupying a position outside the scope of financial discussions and decision making.

Pensions were less likely to be raised for discussion by the couple than other financial issues were.
There were indications that workplace pensions, where offered, had not usually been discussed
within the context of the household.

4.2.1 Long-term decisions with long-term consequences

Decisions can be shorter- or longer-term in their implementation, and in their consequences. For
example, making a significant purchase, such as a car or expensive holiday, is a short-term action,
completed relatively quickly, with outcomes that are evident soon after the decision is made. Other
decisions, such as buying a house, have relatively immediate consequences – the buyer can live in
the house soon after reaching all the necessary agreements, for example – but saving up for the
purchase itself generally takes years to complete and so the decision is in that sense a long-term
one. Figure 4.1 below illustrates some short- and long-term decisions and consequences.

Figure 4.1 Short-term and long-term decisions and consequences

Long-term

Pension

Buying first
property Mortgage
Starting a
Decisions

business

Having Getting
Short-term

Car children married

Holiday Life
insurance

Short-term Long-term
Consequences
 Retirement decision making 33

Pensions stood out as long-term decisions with long-term consequences. Couples tended not to
recognise the relative ease of implementing a pension or the benefits of beginning to save for the
future. Instead, they generally perceived no immediate result of joining a pension scheme and
beginning to make contributions, other than a decrease to net earnings.

While classical economic theory says that people are essentially rational and self-preserving in
making decisions, behavioural economics posits an alternative view: that people make much
less rational, more imperfect decisions, in real life. In their explanation of behavioural economics’
foundations and features, Thaler and Sunstein (2008) include a description of factors that cause
people to make poor choices, many of which are relevant to this discussion.

Behavioural economics argues that people tend to make poor choices when these choices have
delayed effects. Indeed, participants pointed out that they were expected to make choices about
retirement provision years before they reached this stage of their life. Moreover, for most people,
the relationship between pensions-related decisions and the retirement experience was ambiguous.
The expected income from a pension would begin to be paid only in several years’ or even several
decades’ time, and some people reported that they did not understand from the projections they
received how much income a pension would provide, or, consequently, the experience that their
behaviour in saving into a pension scheme, would translate into.
‘I know how much it will be worth and what it would do at the moment, but the forecast
changes every year. Obviously, inflation and stuff like that would alter it.’
(Simon, 40s, North East)

‘It’s very difficult to estimate how long you’ll continue in decent health, and even what you
want in ten years’ time.’
(Jack, 50s, North West)

The decision to save in a pension scheme was long-term, with the consequence – an income that
most people thought of as being part of the far-off future – also long-term in nature. It followed that
for most couples, pensions were outside the scope of most of their conversations about financial
decision making. Relatively few couples participating in the research had made a significant financial
decision that was specifically pensions-related, such as beginning to make contributions, or deciding
to increase their level of contributions.

Compounding this, individuals with non-state pensions were most often members of workplace
schemes. The implication of these schemes’ nature as workplace pensions, was that the possibility
of joining was often introduced, considered and negotiated, specifically within their workplace.
Consequently, it was natural for the decision to be made in the workplace, too.
‘I kind of just did it [joined the scheme] but I did tell [Keiran] afterwards and luckily he said,
“That looks good.”’
(Reena, 20s, North East)

The decision to join a workplace pension was itself often a passive one, and more a matter of
deciding to accept what was offered, than of actively seeking out or selecting a product and level
of contribution. Crucially, the workplace pension was often thought of as an individual product, and
the decision to participate in a workplace scheme as an individual one.
‘The pension is something that you have got to wrap around yourself. It’s individual.’
(Edith, 60s, North East)
34 Retirement decision making

4.2.2 The appeal of tangible outcomes

Behavioural economics argues that the more distant and abstract the outcome of a decision, the
harder it is to arrive at. An added complication with pensions is their lack of tangibility: there is
no physical ‘reward’ as a result of the decision, as there is with many purchases. To illustrate this,
participants in this research whose significant financial decisions had been to purchase cars and
holidays, for example, had not usually felt intimidated by these decisions. This ties in with Thaler
and Sunstein’s (2008) claim that people find it easier to make decisions that give them constant
or immediate feedback and reward. Buying a car gives instant gratification because it can be driven
straight away; purchasing a holiday does not give such immediate feedback but the time that
elapses between making the decision and experiencing the holiday is generally a relatively short one.

There were indications that decisions couples had taken to purchase financial products had been
harder. However, many alpha partners and some beta partners still appeared comfortable with
decisions of this kind – insurance products, for example. Typically, couples who had purchased these
products had identified a need for them, and so were clear that this was something they wanted,
and were gratified by the purchase. While, for example, life insurance did not give ongoing feedback
to couples purchasing it, they were rewarded by the feeling that they had cover in place and would
benefit from the product if they needed to.

Behavioural economics also holds that people tend to struggle to make decisions when the choices
they make give them poor feedback and give uncertain returns. In this research, people indicated
that choosing investment products had put them out of their comfort zone compared with more
‘everyday’ purchases. The products appeared more distant and abstract to people, with only a few,
mainly alpha partners, comfortable making these decisions.

Finally, pensions represented one of the most difficult financial decisions couples were faced with.
These were seen as the most distant and abstract sort of financial product, and the uncertainty of
the return they might provide was thought of as one of their defining features. Some people talked
about struggling to understand pension statements, or simply ignoring them, and many expressed
concern over ‘horror stories’ they had heard in the press about returns and losses.

Figure 4.2 illustrates how the ease of making financial decisions varies according to how tangible or
abstract the product in question is.
 Retirement decision making 35

Figure 4.2 Ease of decision making about different items and products

Easy decisions
Tangible items
• Decision to purchase gives constant or immediate feedback. Almost all are
• Gives tangible rewards. comfortable
• E.g. houses and holidays.

ions
Tangible financial products
Most alphas and
• Decision to purchase results in latent gratification.

decis
minority of betas
• Gives poor feedback, but definite return.
comfortable
• E.g. life insurance.

king a
of m
Distant/abstract financial products Minority are comfortable,
• Decision gives poor feedback and uncertain return. usually alphas

Ease
• E.g. investments.

Pensions
• Pensions regarded as extremely distant and
abstract financial products. Small minority are comfortable,
• For many, defined by lack of perceived return. usually alphas
• May only value once at risk of losing e.g.
in case of final salary scheme under review.
Difficult decisions

There were also indications that people were loss-averse: a few seemed only to value their
workplace pension, once they were at risk of losing it.
‘I work for an employer that has got a good reputation for a good pension. I kind of take that for
granted, really, but they are changing this year. I think we have the final salary pension and that
might be going ... Our contributions are going to increase. […] That is what has made us think
about, will we have enough at the start of my retirement?’
(Danielle, 40s, North West)

Only rarely did individuals, usually alpha partners, describe themselves as comfortable with decision
making that concerned pensions.

4.2.3 Rejection of retirement planning

Retirement planning, and pension saving specifically, was often put off, and sometimes rejected
entirely. Three main types of reasons were evident for this rejection. They are discussed in turn below.

Some individuals were focusing strongly on the present, and indeed one or two exhibited a latent
‘fear of the future.’ Younger couples in particular spoke of their preference to deal with their current
lives and responsibilities over their futures, especially where they had parental responsibilities. These
tendencies were strongest in the Unbalanced Responsibility and Cautious and Content groups.
‘I want to stay young with the children. I don’t want to get older. I get funny even thinking
about it.’
(Caitlin, 30s, South East)
36 Retirement decision making

More broadly, there was a general sense of uncertainty about the future among participants, and
this affected their openness to retirement planning in a negative way. This was particularly the
case for the Unbalanced Responsibility and Cautious and Content groups. It was typical for couples
in these groups to talk of the government ‘moving the goal-posts’ – the changes to State Pension
Age were a frequently-cited example, and to express distrust over the government’s handling of
pensions policy.
‘But we have contributed an awful lot more [than she expects to receive in the form of the
state pension]. We have contributed over the years. NI actually was for your pension and for
your National Health and now it is purely for your National Health. But they haven’t reduced the
percentages [that people pay as NI contributions].’
(Hailey, 60s, South East)

Another reason for rejecting retirement planning was the conviction that savings would be
unreachable not just for the accumulation period, but ‘forever.’ Some people saw retirement as
being so far away, that they were unlikely ever to see money saved in a pension again. In short,
they were extremely reluctant to ‘surrender’ money to a pension when they were so uncertain of
the return they would see, and so aware of horror stories. Again, this sentiment was more prevalent
among the Unbalanced Responsibility group than the others.
‘It’s just the fact that I heard loads of people lost loads of money [in pensions].’
(Tim, 20s, North West)

4.2.4 Inertia
There was an overall tendency, across all three of the groups identified in the typology, for
retirement planning and decision making to be inhibited by inertia. While most people saw
retirement planning as something positive, they did not take steps to put any provision in place.

This inertia took three main forms, which are discussed individually below. In some cases, retirement
planning had not been rejected, but one or more of the varieties of inertia discussed below was
entrenched and difficult for the individual or couple to overcome.

Day-to-day inertia
Couples’ ongoing need to deal with everyday life and its various demands on their time tended to
result in their only becoming aware of the need to make decisions about retirement, or to prioritise
them, when triggers took effect, alerting them. All three groups in the typology mentioned day-
to-day inertia implicitly, or spoke directly of their need to prioritise the ‘daily grind’ over retirement
planning.

Material inertia
A few couples, particularly in the Unbalanced Responsibility group, explained that they were simply
unable to plan because they had insufficient money available to enable decision making. This
included couples where one or both partners had a low or irregular income – for example, those
who worked on a self-employed or freelance basis.
‘I think, because we haven’t really got much spare money, it goes on something like the washing
machine or the kids, so it’s not something that I personally have thought, “I can afford to put
into a pension.” It’s never really come into my mind. We haven’t got it at the time. If we do in a
couple of years, then it is something that I might, as the kids are getting older, think, “I’ve got
money spare.”’
(Caitlin, 30s, South East)
 Retirement decision making 37

Emotional inertia
For some individuals, reluctance to make decisions, or to contemplate retirement at all, stemmed
from an underlying fear or sense of intimidation when faced with financial products and decision
making. It was evident from interviews that some people’s lack of confidence was a consequence
of their unfamiliarity with this type of product. Some spoke openly about their fear of making the
‘wrong’ decision and wasting their money. Others pointed to the economic climate.
‘I don’t know enough. The whole country doesn’t seem to be confident, especially when it
comes to savings and banking and whatever else.’
(Malcolm, 40s, South East)

How inertia may change over time

Piecing together the circumstances that all of the couples describe, indicates that the types of inertia
at play tend to vary over the life course. The situations that participants described indicated that
many believed inertia would abate as certain ‘milestones’ such as marriage and parenthood were
achieved. In essence, some couples suggested that being ‘old enough’ to make plans for retirement
corresponded with the incidence of certain life events such as marriage or parenthood. Despite this,
in some cases, such life events tended to reinforce other existing types of inertia, with the result that
retirement planning was still not addressed. For example, the additional responsibilities that come
with having children can give couples yet another reason not to save for retirement. At no point do
the three forms of inertia appear to subside enough for couples to make their retirement plans well
in advance of it.
‘I think once you get married and you have children and then it [planning your retirement] is the
next stage isn’t it? At the moment I am in my mid-20s and still having fun.’
(Sally, 20s, South East)

Figure 4.3 illustrates the broad pattern in the three types of inertia and how the couples participating
in this research indicated that they grow and reduce throughout the life course. For example, day-
to-day inertia is a constant presence, and this layer is the same thickness all the way through the
life course, including after the ‘house/married/children’ and ‘retirement’ milestones are achieved.
Emotional inertia, in contrast, was portrayed as reducing slightly as the ‘house/married/children’
milestones were reached, but then increasing afterwards and reaching a peak before declining, and
featuring hardly at all after retirement.
38 Retirement decision making

Figure 4.3 Typical variation in the types of inertia inhibiting retirement

over time

Emotional barriers do
not necessarily
disappear with age.
May even increase as Adjustment to life on
House couples face new a lower income
Married challenges
Retire
Children

Young Old
Indications of belief that … however, low financial
Material
with these ‘milestones’ confidence and general inertia
inertia
achieved, will be more still feature strongly. Couples
financially confident with children are often caught
Emotional
and responsible up in parental responsibilities
inertia

Day-to-day
inertia

4.2.5 Likely reactions to automatic enrolment

There were broad patterns in the three groups’ likely reactions to automatic enrolment, and
in whether they thought it would be likely to impact on their current pension savings or other
retirement provision. The groups are discussed in turn below.

Unbalanced Responsibility
Although they recognised that they would have to make contributions, some couples in the
Unbalanced Responsibility group thought of automatic enrolment as giving them ‘something for
nothing’ and anticipated remaining in schemes. Others in this group displayed a marked tendency
to distrust the government. While this distrust was mentioned by couples in the other groups, it was
more pronounced in the Unbalanced Responsibility type. These couples were often wary of what
they would receive through automatic enrolment. One or two expressed intentions to hedge their
bets, for example, by investing an equivalent amount to their automatic enrolment contribution in
an alternative form of savings.

While members of this group were among the most negative in their reactions to automatic
enrolment, Unbalanced Responsibility couples were also typically the most ‘inert’ group, as described
above in Section 4.2.4. It therefore seems likely that most couples in this group will continue to
contribute to employer schemes after automatic enrolment is implemented.
 Retirement decision making 39

‘Would I take myself off the default? I feel like I need to do more research on how pensions work
now. I don’t trust the Government at all. None of it feels stable and I am not surprised that they
are changing it but I don’t necessarily trust that they are going to be changing it for the better
… I wouldn’t [opt out] but I would have another one as well just as backup. It does feel like a
serious thing and I would feel better having two different schemes and not putting all my eggs
in one basket.’
(Laura, 30s, South East)

Cautious and Content

Couples in the Cautious and Content group tended to be open to the ‘nice extra’ that they saw
automatic enrolment as providing, with some especially welcoming the need ‘not to think about it.’
While this group was largely positive to the idea of automatic enrolment, they were unlikely to think
it would have any effect on other pension provision, or on their overall plans. Overall, the indication
among the Cautious and Content group was that they would remain members of schemes that they
were enrolled into.
‘Actually, I think that’s probably quite good, because it takes away the decision making unless
you decide to opt out, obviously.’
(Mathew, 60s, South East)

Organised Aspirational
The Organised Aspirational group responded relatively positively to the idea of automatic enrolment,
or at any rate, did not see it as problematic. Some within this group expressed interest in knowing
more about it, to allow them to ensure they could afford to make contributions, and to be clearer
about the likely returns they would get. Overall, there were indications from this group that as long
as any strongly-felt concerns were assuaged, they would not opt out.

To summarise, some of the three types were more open to automatic enrolment as a concept than
others. Whatever their response, there was no indication that the majority of individuals in any
group would take steps to opt out of a workplace scheme. It, therefore, appears likely that many will
remain in schemes by default after being automatically enrolled.
40 Conclusions

5 Conclusions
This chapter draws together the research findings, and explores possible implications with regard to
policy aimed at increasing couples’ pension saving.

5.1 The process of couples’ decision making

While couples admit they do not typically enjoy managing their household finances, they recognise
the importance of keeping abreast of incomings and outgoings. Many of those we spoke to
mentioned exercising financial prudence, and gave examples of ways in which they did this.

Couples are typically moved to actively make financial decisions by ‘life triggers’ such as getting
married or having children. Discussions tend to increase in momentum from the outset to the point
where a final decision is made.

Couples find short-term decisions with short-term consequences, such as holidays or purchases
for their children, the easiest to make. Even the most financially daunted partners engage with
household finances at this level. Conversely, only a small number of people engage successfully
with long-term decisions entailing long-term consequences.

5.2 The respective partner roles in financial decision making

In most couples, one partner fulfils an ‘alpha’ role, exhibiting greater financial control, both over
day-to-day matters and in the longer term. Alpha partners are not necessarily financially savvy
or confident; often their behaviour is dictated by their partner’s reluctance to take on financial
responsibility, rather than by their own eagerness. The ‘beta’ partner’s level of responsibility tends
to be limited, but this partner generally provides at least some input to decisions. These respective
roles are often self-reinforcing, with beta partners becoming accustomed to relying on their alpha
counterpart over time.

Women are more often than men the alpha partner, and so tend to be the instigators of financial
decisions, and to carry out the research that informs its outcome. The internet in particular emerged
as a channel used frequently by alpha partners to inform significant household financial decisions.
While couples’ financial decisions are collaborative, their responses generally indicate that it is the
final stage of the decision-making process that involves both partners to the greatest extent.

Policy communications could leverage this pattern of decision making by appealing to the
female alpha partner during the research stage of decision making. Additionally, the suggestion
that women are more ‘stressed’ about household finances may be relevant to the framing of
communications aimed at encouraging retirement planning and provision. Reaching out to beta
partners may not be as effective as reaching out to alpha partners, given that the former usually
rely on their partners for long-term financial planning.

5.3 The existence of household decision-making typologies

This research found that patterns exist in the way that couples go about making financial decisions
together, and the way they feel about finances. We have identified three broad groups: Unbalanced
Responsibility, Cautious and Content, and Organised Aspirational. On the surface, decision making
appears to be carried out as a couple; in reality significantly personal roles and tasks make up
the process.
 Conclusions 41

Understanding the characteristics of the different groups may prove useful for tailoring messaging
about retirement planning. In particular, it may be worth considering that couples in the Unbalanced
Responsibility group were least likely to engage with pensions.

5.4 The individual character of retirement planning

The research also highlighted the possible limitations of approaching pension saving from a couple’s
perspective: across the groups identified, pensions were typically treated as very individual financial
products.

Most couples, even those in older age groups, discuss retirement only on occasion. Relatively few of
those we interviewed had been truly active in putting retirement provision in place: although many
had a non-state pension, this was in most cases a workplace pension offered by the employer and
accepted by the individual. Pension ownership, therefore, is not typically the result of a genuine
‘household’ decision, discussed by both partners.

The generally individual and work-based nature of pensions suggests that the workplace is likely
to be the more appropriate space in which to communicate information about pension policy
developments, particularly automatic enrolment. This research indicates that active pension-
related discussions and decisions may be more likely to happen in the workplace than elsewhere,
including within the household. Discussions could still take place at home, for example when beta
partners look to their partner for their opinion on the scheme, but they will still be given the relevant
information at work as a starting point.

5.5 The difficulty of engaging with pension products

Couples tend to make excuses for not having put more concrete retirement plans in place. Some
rationalise their inaction by suggesting that they may continue to work beyond State Pension Age,
or that they could downsize their home. Others say that they contribute to a savings account as
a substitute for pension saving, or that they will save more for retirement in the future when their
earnings are higher.

Couples see retirement planning as involving long-term decisions with long-term consequences
– what behavioural economics calls ‘delayed effects’. Unlike financial decisions with more
tangible outcomes, like purchases, no immediate gain is made by starting or increasing pension
contributions, or saving for retirement in some other way. This makes it difficult for momentum to
build in the same way as with other financial decisions, where the topic needs to be returned to
several times before an outcome is reached.

In this study, we found that while it is typical for significant financial decisions to be instigated by a
trigger, few triggers appear to prompt decisions specifically about retirement provision, or to create
engagement with pensions. The unfamiliarity of the decision type, often combined with a lack of
financial confidence, mean that pensions often feel like an unknown quantity.

While it would be extremely difficult to transform pensions into a more tangible financial product, or
to improve the relationship between today’s choice to save and the long-term experience of living
from those savings, there are ways in which the potential positive outcomes of pension saving could
be conveyed more clearly. For example, associating pensions saving with providing for one’s children
could leverage parenthood’s role as a life trigger in prompting active decision making. Additionally,
giving some sense of a ‘guaranteed minimum’ return on a pension may help to increase tangibility.
42 Conclusions

5.6 Active rejection of pension saving

Households also present reasons for rejecting retirement planning altogether. The main reasons
people give are their preference to focus on the present, their mistrust of pensions and their
uncertainty about what the future will bring. Couples in the Unbalanced Responsibility group are
most likely to express distrust of government ‘moving the goalposts’ for retirement; they also have
a tendency to link pensions with their negative perceptions of the government.

Active rejection of pension saving is something to consider with regard to the introduction of
automatic enrolment. Educating people not to opt out of their workplace scheme once enrolled
may help to overcome this rejection, particularly for the Unbalanced Responsibility group, who
display the most negativity towards automatic enrolment, in part because they understand it to be
a government-led measure. However, the research indicates that couples in this group are typically
the most inert when it comes to making retirement-related decisions: ironically, they could therefore
be the least likely group to actively opt out of a scheme.

5.7 The lifelong influence of inertia on retirement planning

The research indicates that several different layers of inertia exist, diverting people from long-term
financial planning. In particular, ‘day-to-day’ inertia – the ongoing need to manage the home
and family from one day to the next – tended to focus households in all of the groups on tactical
financial issues, rather than strategic ones. While almost all couples appear to suffer to some degree
from day-to-day inertia, couples in the Unbalanced Responsibility group profess to be most affected
by the other types of identified in the research, ‘material’ inertia and ‘emotional’ inertia.

Due to the various types of inertia acting on couples throughout the life course, they typically find it
very difficult to plan for retirement well in advance. Conversely, this inertness is likely to mean that
they will remain in a pension scheme, should they be automatically enrolled by their employer.

The combination of the ‘unknown’ nature of pensions, the fact that they do not provide instant
benefits, and the backdrop of multiple layers of inertia, has often resulted in passive – and often
individual – retirement-related decision making in general.

Highlighting the instant benefit of beginning to save into a pension, and underscoring the immediate
protection that doing so could provide, could be a way to address the lack of tangibility and
feedback that makes the decision to save in a pension difficult for many.

5.8 Implications of the research findings for automatic

enrolment
As noted above, the research indicates that in many cases, people will remain in employer schemes
after they are enrolled automatically, and that this will be the outcome even among couples who
are more sceptical about pension products, because of their relative inertness.

There is little evidence from this research to suggest that automatic enrolment could encourage
‘trading up’, with a positive experience of being enrolled and receiving employer and government
contributions leading people to increase their level of contribution. Given the passivity around
pension decisions that this research has highlighted, it is unlikely that most will increase their
engagement in this way as a result of being enrolled automatically in an occupational scheme.
 References 43

References
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decision making. Financial Counselling and Planning Vol. 13 (2).

Bryan, M. et al. (2011). Who Saves for Retirement? The Strategic Society Centre and Institute for
Social & Economic Research.
http://haec-clients-public.s3.amazonaws.com/ssc/pdf/2011/12/07/Who_Saves_for_Retirement.pdf

Friends Provident Foundation (2010). Assets and debts within couples: intelligence on financial
inclusion.
http://www.friendsprovidentfoundation.org/reports.asp?section=24&sectionTitle=Reports

Smith, S. (2006). Persistency of pension contributions in the UK: Evidence from aggregate and micro-
data. CMPO, University of Bristol, Working Paper No. 06/139.

Thaler, R.S. and Sunstein, C.R. (2008). Nudge: improving decisions about health, wealth, and
happiness. London: Yale University Press.

Thomas, A. et al. (2009). Individuals’ attitudes and behaviours around planning and saving for later
life. DWP Working Paper No 72.
This qualitative research was undertaken to understand more about just how couples
go about making financial decisions and particularly those around pensions and
retirement planning.

It addresses questions such as: How do couples differ in how they go about making
financial decisions? Do couples discuss and coordinate their pension planning?
And how will they react to the introduction of automatic enrolment?

If you would like to know more about DWP research, please contact:
Carol Beattie, Central Analysis Division, Department for Work and Pensions,
Upper Ground Floor, Steel City House, West Street, Sheffield, S1 2GQ.
http://research.dwp.gov.uk/asd/asd5/rrs-index.asp

Published by the
Department for Work and Pensions
August 2012
www.dwp.gov.uk
Research report no. 805
ISBN 978-1-908523-79-2