Aon’s 2021 Global Defined Contribution (DC) Retirement Study

Globally, total retirement savings have now exceeded USD $50 trillion. The OECD reports that most of these assets are now in Defined Contribution (DC) savings, and the proportion continues to increase as DC becomes the dominant way in which individuals save for their retirement.

Around the globe Aon is helping our clients tackle the challenges that come with the growing reliance on DC savings. The regulatory environment, the pace of change and the model of DC retirement provisions may vary from country to country, but the underlying challenges are the same: the shift of risk from the State and/or employer to individual employees, low savings rates, a lack of employee engagement and/or understanding and the impact of longevity uncertainty on individuals’ retirement planning.

 Aon has asked employers across the world about their approach to delivering DC savings to employees in a series of detailed local market surveys.

Our research shows that employers globally want to ensure their DC plans offer optimal value for employees and deliver better retirement outcomes. To support this, they recognise the importance of increasing employees’ engagement with the plan through improved communication and broader financial wellbeing strategies and design features. DC plans need to reflect members’ unique circumstances and provide them with the options, guidance and education they need to define and achieve their desired retirement outcomes.

Governance continues to be a key focus for employers. Many have already taken steps to manage their governance risks through outsourcing some or all plan functions. This is borne out by the increased trend towards delegation and use of multi-employer solutions in a number of key markets. Nonetheless, it remains crucial for employers to regularly review the operating model for their global DC plans, to ensure they continue to meet the company’s objectives, are locally compliant and, critically, deliver the best possible outcomes for members.