Kelly Hurren, partner and head of member options and support at Aon in the UK, said: “This year’s survey brought the encouraging news of the increasing trend of UK pension schemes providing more information and better support to their members at retirement. It is a trend that has increased steadily over the seven years we have conducted our survey and one I expect to continue. This means that members are better informed at a key time in their own personal financial planning.
“As well as a rising number of schemes providing members with access to education and support, we are also seeing an increased trend for providing flexibility in how members can take their benefits at retirement. We found that 30 percent of schemes offer a Pension Increase Exchange (PIE) and/or Bridging Pension Option (BPO) to members at retirement.”
Kelly Hurren continued: “Schemes with additional options in place are factoring this into their longer-term planning. In some cases, if they are expecting a significant proportion of their non-pensioner population to retire in the short- to medium-term, they are choosing to run-on their scheme for a period of time.
“That said, our survey showed that 54 percent of schemes are targeting buyout as their long-term objective. A significant 65 percent of these schemes plan to offer additional options and/or support to members as part of the journey to buyout, with 30 percent planning to communicate to members in bulk, prior to the options and support changing as part of an insurance transaction. Where schemes have already carried out a bulk annuity transaction, over a quarter have retained member options or support after the buy-in has taken place - and we expect this trend to continue.”
As the member experience becomes a focus for UK schemes on a journey to buyout, this year's survey also asked six of the leading insurance participants for their views on member options and support. These were the key findings:
• One insurer is making IFA advice available to all annuitants, while a further two insurers are actively looking at their offering.
• The remaining three are not proactively looking but would consider continuing with an existing IFA for larger schemes.
• Most insurers are planning or already have some digital capabilities for member self-service.
• Fifty percent of insurers would consider making additional options (such as BPO) at retirement available for a scheme of any size.
Kelly Hurren said: “Historically, bulk annuity insurers have not provided IFA support or additional options after buyout – but that’s changing. It’s great that insurers are recognising their responsibilities to members and adopting similar approaches to those followed by schemes. But it is still early days and to continue driving this change we believe that trustees and sponsors should be engaging with insurers at an early stage to signal the importance they place on addressing the underserved members and giving them the best possible support.”
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