USS uses A2Risk ATRQ to Survey Member Risk Attitudes
In a recent survey of the attitudes of members of the UK’s largest private pension scheme, the Universities Superannuation Scheme (USS) used A2Risk’s Attitude to Risk Questionnaire (ATRQ) to understand their members attitude to risk. This follows a 2015 USS-Pensions Institute study which used the questionnaire to guide the design of the default fund for USS’s then-new hybrid pensions product, combining defined benefit (DB) for all members with defined contribution (DC) benefits for higher earning members and those who want to save more voluntarily. 70% of USS members now have some DC benefits compared with only 20% in 2015 – a significant shift in the makeup of the membership. USS’s active membership comprises some 233,000 academic and professional services staff working in over 300 institutions with links to Higher Education throughout the UK.
Results: Consistency in Overall Risk Aversion
Overall levels of risk aversion have remained remarkably stable over the period given the change in numbers of participants and make up of the DC member population. The average member’s ATRQ score in 2024 is nearly identical to that in 2015 – and there is a similar distribution of scores around the mean. This consistency underlines the reliability of the questionnaire in capturing stable, meaningful insights over time. Concerns regarding the volatility of stock market investments remain steady too. Confidence in understanding investment matters is, however, a fraction lower. The 2024 survey also shows a slightly greater preference for taking on more risk (in expectation of a higher expected return) rather than saving more to get a higher pension. This could reflect the heightened cost-of-living pressures many individuals have faced since 2022 compared with 2015.
Demographic Variations in Risk Attitudes
The survey also shows differences in risk attitudes among various demographic groups. Women are much more risk averse than men, while members earning more than £70k are significantly less risk averse compared with those earning below £40k. These results mirror the analysis A2Risk regularly conducts on national samples representing advised customers across Britain. Additionally, members who have made additional pension contributions are less risk-averse, suggesting a stronger familiarity with or confidence in investment-related decisions.
A Robust Framework for the Future
Understanding risk attitudes is a vital part of ensuring financial products meet the needs of diverse groups. The stability of the A2Risk ATRQ over a turbulent decade provides USS with comfort in their established default strategy.