Do You Need to Be Good at Maths to Work in Pensions?

Skills beyond maths: What makes a great pensions manager?

If I could catch up with my 12-year-old self, I am quite sure they would be surprised to learn that I’ve worked in the pensions industry for a number of years. At that age I had no idea  what a pension was, and anything involving numbers (like pensions!) just wasn’t  my cup of tea. Growing up, I struggled with the more complex areas of maths, and I got lost in blackboards covered in what looked like Egyptian hieroglyphs – requiring complex skills to translate and solve the mystery.

However, I can now reassure my 12-year-old self that you didn’t need to be a maths whizz to work in the pensions industry. The role of a pensions manager requires plenty of different skills, and knowing your way around the calculator is just one of them.

The Role of maths in pensions

Of course, there is a bit of maths to pensions. The industry is all about ensuring people have enough money to live on when they finish work. To do this, we need to understand how contributions, investment returns and charges impact on the value of pension savings at retirement. Being able to calculate percentages helps with this because contributions are often expressed as a percentage of salary – including those paid by your employer.  

Investment returns, linked to the underlying funds that your pension is invested in, are also typically shown as percentages and usually involve graphs to illustrate investment performance. Charges too are usually based on a percentage of your savings, so this will give you an idea of how much will be taken out by the fund manager to cover the cost of their services.

The fun part of pensions – planning how to spend it – also involves a little maths. Budgeting for retirement, factoring in everyday costs and any bucket list items, will give you a sense of how much needs to be saved. It also helps in deciding (whether you prefer to have your money paid as regular  income or lump sum. 

Hoping 12-year-old me is still awake at this stage (pensions can have that effect on people), I would also explain that being older means I am lucky enough to have a couple of defined benefit pensions. Having a grasp of fractions as well as basic formulas comes in handy. 

The pension I will be paid is based on a formula (number of years in the scheme divided by the accrual rate which is where the fraction comes in ) multiplied by a future (and unknown) final salary at retirement. If you want to spice things up with a bit of algebra, and represent the unknown  as ‘x’ or ‘y’ then feel free, I would prefer not to go there!

The many skills of a pensions manager

By now, my 12-year-old self has had enough of maths and more interested to find out what other skill sets a pensions manager might need. Too many to cover here, but my favourites include:

• Planning skills are vital – you need to be able to arrange a trustee meeting including booking venues, select a meeting date that suits everyone (probably the most challenging part), and organise the refreshments – a key part of any meeting.

• Excellent written skills – you will need to be able to produce various papers which range from creating an agenda, writing minutes and creating or editing any number of different documents, including policies on how the trustees deal with issues, responding to a letter of complaint from a member etc.

• Attention to detail – pensions have lots of rules to follow and being able to understand and implement them is key. Observing the small details such as spelling or knowing a client’s preference for refreshments also reinforces professionalism.

• Technically adept at using a range of software which can range from holding meetings online, to creating a library in a database or creating budgets in Excel.

• Technical pensions knowledge is key, too, which may include studying for qualifications.

• An interest in people – you’ll be working with lots of different people from a variety of backgrounds. This can include professional advisers, trustees who help to manage the pension schemes, and members who are requesting information about their pensions. Having empathy and being able to listen are useful skills.

I hope I’ve reassured 12-year-old me that not having an advanced maths qualification hasn’t held me back in my career.  A basic understanding and a good calculator (or spreadsheet) is more than enough to succeed in pensions, along with a dollop of common sense and an enthusiasm for working with people and delivering a high quality of service to them.

For more about the mathematical aspects of pensions, read our related blog: The Importance of Mathematics
in Pensions.