Management Consulting
Aon
Full Credential Description
Aon's recent DC Today survey highlights significant challenges faced by UK defined contribution (DC) pension schemes amid economic pressures, particularly high inflation and rising living costs. The survey, which gathered responses from 132 DC pension schemes, revealed that one in five schemes experienced an increase in requests from members to reduce their contributions or opt out of pension saving altogether. This trend poses a risk of diminishing retirement income for individuals, as opting out for just three years could necessitate higher contributions later to compensate for the shortfall. In response to these challenges, Aon has identified that 26 percent of DC pension schemes are either implementing or considering additional flexibility for members regarding their contributions. This approach aims to alleviate financial strain on members while ensuring that mechanisms are in place to restore contributions to appropriate levels after any reductions. Furthermore, nearly half of the schemes (47 percent) have enhanced their communication efforts to keep members informed about their options and the support available during these uncertain times. The survey also indicated that 20 percent of schemes have already provided additional retirement support, with another 23 percent contemplating similar measures. This support includes access to independent financial advisers and improved member communications. Additionally, one in ten schemes are modifying their investment strategies, reflecting a growing recognition of the need for diversification in response to market volatility and inflation. Overall, the findings underscore the proactive steps being taken by pension schemes to support their members in navigating the current economic landscape.