Nearly half (46%) of UK employers with defined contribution (DC) pension schemes say that delivering positive outcomes for members in this scheme is now their top priority, according to research by global professional services firm Aon.
Its Better outcomes by design 2022 DC pension scheme and financial wellbeing survey, which surveyed 109 UK employers with DC pension schemes, also found that this figure has increased since the survey was carried out in 2020, when delivering positive outcomes for members was the primary aim for only 29% of schemes. Back in 2020, employers’ main priority was to offer a pension that was broadly in line with competitors.
According to the research, there has been a continued rise in the proportion of DC schemes considering a change in structure, increasing from around 30% two years ago to 48% now. Among the main driving factors are an increased governance burden, which was noted by 27%, and the will to improve member outcomes, cited by 25%.
Ben Roe, senior partner and head of DC consulting at Aon, said: “This is a positive movement away from simply keeping pace with others, and we expect to see this trend continue in the future. Three-quarters (75%) of respondents also said that delivering better member outcomes is now one of their scheme’s key objectives.”
Steve Leigh, associate partner at Aon, added that while there has been an increase in schemes focusing on outcomes, more can be done to drive a positive impact for individuals, as the level of contributions made and returns generated after charges are key drivers of better outcomes for members in retirement.
“More could also be done to understand and track changes in how much typical scheme members will get in retirement. It is a blind spot for many schemes, with 66% not knowing the projected financial outcome for a typical member. Just a third of schemes assess changes in whether individuals are on track to achieve their retirement goals,” he said.
