One in five defined contribution (DC) pension schemes reported an increase in requests to reduce or opt out of pension savings over the past three months, according to research by Aon.
The data came from the professional services firm’s first edition of DC Today, a pulse survey tracking UK DC schemes, which aims to record how DC schemes and their members are reacting to economic pressures. This edition included responses from 132 UK DC pension schemes.
It found that 20% of schemes have provided additional retirement support and a further 23% were considering doing so, with the types of support offered including access to a preferred independent financial adviser (IFA), enhanced member communications, and signposting to a drawdown provider for flexible retirement income.
A quarter (26%) either had or were considering allowing additional flexibility for members around contributions, and in a three-month period one in six schemes had observed an increase in requests for early access to pension savings.
One in 10 schemes had made changes to investment design, with a further three in 10 considering this option, and 43% had seen a rise in concerns or requests for information about investment performance.
Furthermore, 32% had considered the impact of recent market volatility or higher inflation on member outcomes and 47% had issued additional communications to members.
Steven Leigh, associate partner at Aon, said: “It’s not just the savings part of the pensions journey where cost of living challenges may have an impact. There is a real risk that drawing on pension savings early could result in many employees not being able to afford to retire at the time they had originally planned.
“While we see some concerning trends, it is encouraging to see schemes’ efforts to support members in making better decisions in this challenging environment. This could be very welcome if people are struggling financially and can ultimately serve to reduce the impact on members’ retirement income. However, it is essential that very simple or automated processes are put in place to get contributions back up to appropriate levels following any period of reduced inputs.”