LONDON, 10 December 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), has announced the results of its 2014 Pensions Administration Survey.  A clear message from its respondents was that the current processes and the decisions required when approaching retirement are too complicated for members and that this is having a negative effect on the member experience. Similarly, many respondents are concerned that data issues could hinder future plans for their schemes.

The 2014 Pensions Administration Survey attracted 175 respondents from the pensions industry, with 94% coming from the private sector.

The survey was carried out in the first half of 2014 with responses pre-dating the changes outlined in the Budget speech. However, the survey sheds light on the repercussions – after April 2015 – of the way members with any sort of DC benefits will have more options for how they take their benefits from a scheme, as well as around the choice of products available to them.

Nearly two-thirds of respondents indicated that the processes involved are currently too complicated for members and a similar number believe that the member experience was consequently not good.  Trustees, sponsors and administrators have a significant challenge ahead to improve this part of the service – especially with the increased member freedom and choice brought about by the last Budget.

Questions around member engagement and experience were also clearly indicated as a concern for schemes – but only 20% said they intended to spend money on projects aimed at improving the situation.

Stephen Ruse, UK Outsourcing Commercial Director at Aon Hewitt, said:
“During this period of major change in the pensions industry, the challenges for all those involved in pensions administration are obvious. However, prioritising the best actions to take is not straightforward and some uncertainty was apparent in the responses to our survey.  It is a concern that the survey signaled a clear disconnect between what was recognised as a priority and the willingness to devote money to enhancing communication to members.

“It was also clear that data issues are high on the agenda for trustees and scheme sponsors and that many are focused on dealing with, for example, Guaranteed Minimum Pension (GMP) reconciliations because they cannot defer the project.  HMRC is highlighting the need to reconcile GMPs and to start now – so it’s not surprising that schemes are paying careful attention to this.”

Data and the de-risking objective
The issues around data are inextricably tied to one of the other key concerns for schemes – de-risking. Not surprisingly, the survey findings flagged this as one of the main areas of focus, with respondents having one eye on the future direction of their scheme while also dealing with more current issues.

Martin Bird, senior partner and head of Risk Settlement at Aon Hewitt, said:
“With schemes searching for greater pensions stability, the use of a bulk annuity to secure some or all of the scheme benefits with an insurer is increasingly becoming a key objective. There are also new products and approaches coming to the market and increased opportunities for schemes to de-risk.

“However in our work in this field, the common factor to all successful transactions has been the quality of the scheme data – and the subsequent ability of the scheme to move swiftly to take an opportunity. But the survey showed that while 50% of schemes are looking at some form of de-risking work, and  69% believe that data is an issue, over half of the respondents to the survey indicated that they still intend to dedicate less than a tenth of their expenditure to these challenges.”

Martin Bird continued:
“Quality data underpins the success of almost every aspect of running a pension scheme and de-risking projects are one of the prime examples.  If schemes are serious about their intention to de-risk, they need to be able to take advantage of market conditions, such as favourable pricing, so they can act when the occasion arises.  They also simply need to be certain that scheme liabilities are accurately represented and that the membership can be contacted where and when necessary.  Clean data is essential for this – and missed opportunities and unrealistic buyout quotes are the expensive long term alternative.”

Media Contact: 
Colin Mayes                                  Marina Jane-Sanchez
Aon Hewitt                                     Capital MSL
01372 733689                                020 3219 8811
colin.mayes@aonhewitt.com           marina.jane-sanchez@capitalmsl.com

Notes to Editors

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com

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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.