London – 21 March 2005 –  Whilst UK employees rate pensions as high on their agenda of concerns, it seems that apathy still abounds when it comes to actually doing something about actively planning and saving for retirement by members of Defined Contribution (DC) pension schemes (also known as Money Purchase schemes).

According to new research out today from Aon Consulting, a leading pensions, benefits and HR consulting firm, nearly 4 out of 5 (79%) DC scheme members are only paying the required minimum in contributions, meaning that many employees are likely to be missing out on additional contributions available from their employer.  Additionally less than 1 in 4 (24%) members of DC schemes are deviating from the default investment option offered by their company. 

On the employer side, less than a third of the companies surveyed (27%) feel that their employees are fully aware of the need to regularly monitor their level of contributions and pension funds performance.  The danger for those members who are not actively reviewing their pension is that their level of contributions and investment strategy may not be leading them towards the retirement that they are expecting.

Paul Macro, Head of DC at Aon Consulting, said: “Although it seems that pensions issues are still of great concern to UK employees, there does seem to be a certain apathy amongst both employers and employees when it comes to taking action.  With the wealth of investment funds being offered to many scheme members, the options may seem overwhelming to some and lead to many members simply taking the default option without actually considering whether it is what is most appropriate to them.” 

Aon states that one cause of an apathetic workforce is attributable to a lack of useful information coming through from employers to their workforce.  However, whilst many companies are starting to realise this, only 40% of companies feel that their members are getting sufficient information and support to maintain and monitor their pension schemes to the required level.

Aon Consulting’s survey also highlighted that in order for many scheme members to properly maintain and manage their DC pension schemes, more detailed information needs to be provided by many UK companies to its employees on:

• The different types of investment options available
• The potential risks and rewards of each of the investment options
• The performance of individual funds
• Online access to pension scheme information and up-to-date values of their fund
• Meaningful online projections of benefits

According to Macro, in order for employees to become more proactive in managing their retirement savings via a DC scheme, companies need to:

1. Educate employees about what level of saving is needed in order to reach a desired level of retirement income.
2. Inform employees about the nature of the available investment options within the DC scheme.
3. Monitor the development of the overall scheme (not just investment returns) and review the scheme structure and communications materials on a regular basis

Macro concluded: “As more and more employees enter DC schemes, there is a much greater opportunity for these members to take control of their retirement benefits through a tailored investment strategy and by managing their contributions levels, to actively save for a secure retirement.  However, in order to reap the benefits of a DC scheme, employers and employees need to wake up and start proactively managing their pension schemes or risk being disappointed at a later date.”

 Notes to Editors

About Aon Consulting
Aon Consulting is a leading human capital consultancy, helping organisations of every size to attract and keep the employees they need. We advise on all aspects of employment, including health-related insurance and risk; employee compensation and pensions; human resource strategy planning; job design and change management; and staff assessment and legal issues. Aon Consulting is a division of Aon, the UK’s largest insurance broker and provider of risk management services, a major force in reinsurance and the UK human capital consulting market.  Aon Consulting Limited is authorised and regulated by the Financial Services Authority.

About Aon
Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 48,000 professionals in its 500 offices in more than 120 countries.  Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

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