Management Consulting
Aon
Full Credential Description
The case study highlights the challenges faced by trustees and pension managers in managing risk within defined benefit (DB) and defined contribution (DC) schemes. Aons Global Pension Risk Survey 2023/24 revealed that trustees are grappling with a complex array of risks, necessitating a structured approach to risk prioritization and governance. The survey, which included responses from 204 UK DB schemes, underscored the need for a clear long-term work plan that outlines goals, resource needs, and timelines to effectively manage risks ranging from regulatory burdens to investment risks. To address these challenges, Aon provided tailored solutions that included the development of a comprehensive work plan to identify goals and manage risks. This plan allows trustees to remain agile in the face of changing market conditions and emerging risks. Additionally, Aon emphasized the importance of identifying skills and knowledge gaps within trustee boards, enabling them to seek external expertise when necessary. This proactive approach ensures that boards are equipped with the right skills to navigate complex decision-making processes. A significant focus of the case study was on enhancing board diversity and inclusivity. Aons findings indicated that over 40 percent of boards have begun to consider board composition with equality, diversity, and inclusion (EDI) in mind, surpassing the actions reported in The Pensions Regulators survey. Furthermore, 60 percent of respondents from Aons survey are either currently addressing member engagement or plan to do so within the next year, highlighting a commitment to incorporating member perspectives into decision-making. The implementation of an EDI policy was also recommended as a long-term commitment to board diversity. Larger schemes, particularly those with over £1 billion in assets, are leading the way in developing such policies. Aons approach encourages trustee boards to create an inclusive environment where diverse perspectives are valued, ultimately enhancing decision-making and governance practices. The results of these initiatives are expected to improve risk prioritization and management within pension schemes, leading to better outcomes for members. By embedding EDI into the governance framework, trustee boards can enhance their effectiveness and responsiveness to the needs of their membership.