 MetLife research shows that under a quarter of FD’s are aware of how auto-enrolment will affect their company pension. Just 18% are aware of the switch from RPI to CPI indexation.
MetLife’s Director of Business Development Emma Watkins said, “it’s very concerning that FD’s are making decisions about pensions without knowledge of legislation changes which will affect them.”
Despite these shocking facts, FD’s feel they have become more involved in their company pensions schemes. Just under 25% of the 462 FD’s surveyed thought that de-risking their pension scheme wasn't important to the overall business objectives. This represented a 10% decrease on 2010 for the same schemes.
This awareness was higher in those with closed defined benefit schemes with 6 in 10 saying the de risking was very important. This was stemming from finance directors taking more responsibility for the de risking strategy. 4 in 10 said that the de risking was primarily the responsibility of the employer and a fifth said it was solely the responsibility of the employer. This is a 14% increase on 2010.
Watkins commented: “We’re increasingly seeing FD’s take responsibility for the schemes and for managing the risk in the schemes. In 2008 it was the trustees leading the process but now the employers will initiate the process.”
Watkins went on to say, “It is encouraging that people are now recognizing how important pension scheme risk is, but as an industry we need to make sure people are more aware of the options available to them.”
This was shown in that the research found a poor awareness of the options to de-risk. Pensions transfer buy-ins were the most well known with a quarter aware of how they worked. Only 16% and 15% were aware of asset allocation and longevity swaps respectively. 8% knew of pensions increase exchanges and just 5% had heard of enhanced transfers while a huge 45% didn’t know of any de-risking activities.
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