Management Consulting
Aon
Full Credential Description
Aon identified a significant challenge faced by younger employees in the UK regarding their retirement savings, particularly in light of the upcoming increase in minimum workplace pension contribution rates. Starting from April 6, 2019, the minimum contributions were set to rise to 5% from employees and 3% from employers for eligible workers. This change was crucial as it aimed to enhance the retirement savings of millions of employees, especially those earning over £10,000 annually and aged between 22 and state pension age. To address this issue, Aon provided tailored consulting services that emphasized the importance of workplace pensions as a long-term savings strategy. They conducted detailed calculations demonstrating that a typical 25-year-old on the national average wage would see an increase in their monthly pension contributions by approximately £31. However, due to concurrent changes in income tax and National Insurance thresholds, their take-home pay would only decrease by about £18 per month. This meant that, despite a slight reduction in immediate income, employees would benefit from an additional £58 per month being contributed to their pension pots, potentially resulting in an extra £55,000 in retirement savings. Aon's approach also included insights from their 2018 DC survey, which indicated that many employees were willing to accept higher contribution levels if they were automatically enrolled in schemes that maximized employer matching contributions. Their findings suggested that over 70% of employees remained at the maximum contribution level when defaulted into such plans, indicating a strong acceptance of the need to save more for retirement. This proactive strategy not only aimed to improve individual retirement outcomes but also sought to address broader concerns about the adequacy of retirement savings among the workforce.