DB schemes increase support for members - Aon

Defined benefit schemes are offering more support and flexibility to members, according to Aon’s 2019 Member Options Survey.

The survey gives a snapshot of how sponsors and trustees are deciding on the options to make available to members and what member support should be in place.

The survey of over 320 DB schemes, found a clear trend of schemes providing members with more support with their retirement. Almost one-in-five schemes now make online tools and/or IFA support available to members, along with the figures to help them make an informed decision, compared to around one-in-ten schemes in our 2018 survey. This group is expected to increase to almost one-third of schemes over the next 12-18 months.

As the pension freedom reforms become an accepted part of the pensions landscape, the survey showed that only 10 per cent of schemes are now simply meeting ‘statutory requirements’ - down from 16 per cent in the same survey from 2018.

Schemes are also offering additional flexibility alongside the usual options of a standard transfer value, a pension and a tax-free cash lump sum, the survey found.

Of these, almost a third (32 per cent) were providing members with the option to convert some of their pension at retirement for a higher level of pension in return for lower future increases (a pension increase exchange option), with another quarter (24 per cent) offering a partial transfer option. A partial transfer gives members the option of transferring just a proportion of their DB pension while leaving the rest in the scheme - providing a balance between security and flexibility.

Commenting, Aon senior partner and head of the member options team said: "There was initially some debate around the level of support to offer DB members when transferring their benefits, but the trend we are seeing in the market is quite clear. An increasing number of schemes are moving towards offering members additional advice and the tools necessary to make well-informed decisions at retirement. It is surely better for trustees or sponsors to make this advice available to members, rather than leaving them to fend for themselves in finding a suitable IFA.

“Another key change is in the flexibility being offered to members within DB schemes, so that the freedoms available in DC schemes can be mirrored. Transferring out of a DB scheme can be seen as an ‘all or nothing’ decision but options such as partial transfers can be considered a middle ground between the security offered by a DB pension and the flexibility from transferring to the DC world. This is definitely one of the areas to watch in the coming year as the potential options gain awareness and popularity."

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.