The 2021 Aon Member Options Survey represented the views of 316 UK pension schemes. Building on the results of previous years, it focused on the level of support available to members at retirement and the changes that schemes plan to make.
Kelly Hurren, head of Member Options at Aon, said: “There continues to be a clear trend for schemes to provide members with more support with their retirement decisions. This year, we saw that half the schemes surveyed quoted transfer values in retirement packs or shortly plan to do so. Of these schemes, 60% are also providing additional support at retirement through educational online modellers and/or access to regulated financial advice.
“One new trend in our 2021 survey was the increasing focus on defined contribution (DC) scheme members, as schemes look to replace ‘old style’ annuity brokers with ‘whole of market’ independent financial advisors who can advise on annuity and drawdown products.”
The survey also showed the increased focus throughout 2020 on member support as part of wider employer initiatives linked to the COVID-19 pandemic.
Kelly Hurren said: "Where schemes had made decisions to close schemes to future accrual or to implement benefit changes pre-pandemic, we have seen that the uncertainty caused by COVID-19 has brought into greater focus the need to support members with their retirement decisions. This has particularly been evident where members are facing an earlier-than-planned retirement alongside redundancy.
“Many schemes going through these exercises are making online educational modellers or regulated financial advice available to their members after closure, or are offering other in-scheme options to help make earlier-than-planned retirements more affordable to members."
FCA/TPR guidance
The results of the 2021 Aon Member Options Survey are released shortly after the FCA, along with The Pensions Regulator (TPR), issued its ‘Guide for employers and trustees on providing support with financial matters without needing to be subject to FCA regulation’. When the FCA was consulting on this area last year, there was concern in the industry that one inadvertent outcome could be trustees being prevented from communicating to members about their options or helping them to access reputable financial advice.
Kelly Hurren said: “Thankfully, the FCA has recognised the important role that trustees and employers play in educating members on their options. The FCA has also acknowledged that trustees and employers may be in a better position to identify a suitable financial adviser for members and to negotiate more favourable commercial terms than individual scheme members.
“However, the guidance is less clear in other areas such as how to educate members appropriately on options outside the scheme. Our experience is that the leap from generic information to formal regulated advice is too great for many pension scheme members and that educational online tools play a vital role in bridging this gap. Sensible judgement of the guidance will therefore be needed to ensure that the industry’s progress in educating members over recent years continues – and particularly at a time when members are likely to need this support more than ever."
Aon’s 2021 Member Options Survey
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