My mother spent much of her working life as a home-help organiser, helping other people remain independent and supporting families who needed care. When she eventually needed help herself, however, that lifetime of contribution gave her no particular claim on the care she required. She simply had to pay for it.
That always struck me as odd. We are very good at recognising, storing and exchanging financial wealth, but much less good at recognising other forms of value that people create through their lives. Someone can spend decades creating social value for others, yet very little of that value is carried forward as something they can later draw upon.

It is a question I have kept coming back to. Eight years ago, in Pension Power: investing with attitude, I argued that pension members already had values; the problem was that pension systems often made those values difficult to express. People routinely reflect their values in everyday decisions – what they buy, what they avoid and which businesses they support – yet their pension savings can feel largely disconnected from those choices.

A few years later, writing in Professional Pensions – Why we are looking at DC value for money in the wrong way – I returned to the same underlying problem from a different direction. We were becoming increasingly good at measuring the things that are easiest to measure in pensions – costs, charges and historic investment performance – without first asking a more fundamental question: what do members actually value?

From value exchange to retirement
I now think that question becomes even more important in retirement.

Retirement values are not fixed. What matters to someone at 65 may be quite different from what matters at 75 or 85. Yet retirement is still often approached as a product problem: drawdown, annuity, collective defined contribution (CDC), retirement CDC (R-CDC) or some combination of flexible and fixed income. We ask which solution is best when perhaps the more useful starting point is to ask what forms of value the retirement system is trying to provide, what members give up to obtain them, and whether those trade-offs should change as retirement unfolds.

That leads me to what I would call a dynamic value-based framework for retirement. It builds on the same values-first thinking, but applies it to the design of retirement systems rather than to a one-off product choice.

That was part of the thinking behind value exchange ideas I began exploring in 2019 in conversations with Clare Wood, formerly global head of product and head of investment assurance at First Sentier Investors. The question was whether financial wealth was only one form of wealth, and whether other forms of value could be recognised more explicitly.

Consider a successful fund manager and a care worker. The fund manager may accumulate substantial savings, housing wealth and pensions. The care worker may spend a working lifetime supporting people who are elderly, disabled or otherwise dependent on help.

On a conventional financial balance sheet, the fund manager is clearly wealthier, but that immediately raises some harder questions. Which has contributed more to society? Which has created more value? And are the financial rewards attached to their contributions necessarily an accurate measure of the value created?

The point is not that the care worker is morally superior to the fund manager. It is that financial reward and social value are not necessarily the same thing. Our economic system happens to be extraordinarily effective at pricing, recording, storing and exchanging one kind of value.

That thinking later developed into the Digital Village concept, which Clare and I presented at the Library of Mistakes in 2023. The concept was much wider than pensions. It envisaged financial, social, nature and climate value, a wallet for owning, owing and offsetting, and an exchange through which different forms of value could potentially be recognised and transacted.

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