LONDON, 1 April 2015 – Employers remain unclear on who should take responsibility for guiding employees on their DC retirement options, says Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), following a poll of  more than 670 benefits leaders, trustees, plan sponsors and HR and finance professionals from Europe, US and Australasia.

The survey was conducted during a series of webinars on the challenges of the changing DC pensions landscape around the world.

It was the UK employers in the poll who indicated the highest levels of uncertainty about where the responsibility lies for guiding employees on DC retirement options. Of the UK respondents, 20.6% said that they felt it was the responsibility of the employer; 7.9% pointed to the government and 3.2% saw it as the trustees’ responsibility. The remainder indicated that they believe that guidance should be provided either by a financial adviser (6.3 %), a DC retirement plan provider (14.3%) or by employees themselves (11.1%). 36% of respondents believed that the responsibility for guiding employees needs to be shared.

Sophia Singleton, partner and head of DC consulting at Aon Hewitt in the UK said:
“The increase in the choices and options available to people in the UK at retirement under the coming new rules, raises the question of how individuals will be guided to make important decisions. It’s clear that not everything is going to be ready and available on Day One of this new era and this uncertainty was reflected in the UK responses to our poll. We expect that in the short term, many members will have to go it alone as the market continues to evolve.

“Our recent DC member survey with Cass Business School outlined that not all employees have the same expectations from their pension and that they are likely to seek help with their planning from a variety of sources. The clear onus on employers from 6 April is to increase communication with and understanding of their own workforce to provide the right guidance that will allow them to reach their retirement goals."

Sophia Singleton continued:
“It seems that the best practice will be for employers to offer guidance to members long before retirement and to regard the Guidance Guarantee as only one part of the education process to help them make better decisions when they retire.”

Taking cash option
The poll also revealed that the majority of UK employers, DC plan providers and trustees (66%) think that allowing members to take all their benefits as cash is a good idea, but a third felt that this must be accompanied by information and adequate guidance. Less than two per cent of those polled thought that members should not be allowed to take their benefits in cash in any circumstances.

Sophia Singleton said:
"It is encouraging that the industry is broadly supportive of increased drawdown options such as cash, but there is a role for employers and trustees in helping their members to understand the implications of this. Schemes, and the pensions market as a whole, will want to look at alternative approaches to dealing with the decumulation issue.

“Adequate member guidance and support will also be vital here, to ensure that members understand the potential implications of taking all their benefits as cash and of relying on the State and non-pensions income to fund their retirement.”
 

Media Contact:
Colin Mayes                                        Anelia Fikiina
Aon Hewitt                                           CNC
01372 733689                                      020 3219 8887
colin.mayes@aonhewitt.com                 anelia.fikiina@cnc-communications.com
 

Notes to Editors
Link to the DC survey

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.