You want the best fit for your pension scheme members — and your business. But how do you compare, and do you have the right measures of success?

In our 2020 Defined Contribution (DC) Pension Survey we sought the views of trustees, pension scheme managers, finance directors and HR managers from a wide range of sectors, about the challenges they face and their aspirations for scheme members. There is an opportunity to make DC pensions more tailored towards retirement goals, lifestyle, income and behaviours. Our research shows that respondents want to offer competitive, ‘good value’, DC pensions. Most want to do more than the minimum level required, but many do not measure whether they are succeeding in meeting their objectives.

In our report we see how DC schemes in the UK measure up across key areas, including strategy, scheme design, contribution levels, investment approaches and member engagement. The report includes insights from Aon experts on what the findings mean now and for the future shape of workplace savings objectives.

Get the measure of objectives What are the current strategic trends in DC pensions?

More schemes aim to benchmark with peers

than aim to deliver sufficient funds for employees to retire

1 in 3

schemes do not measure progress against their objectives

Over 7 in 10

schemes have ‘delivering value for members’ and ‘improving member outcomes’ as objectives

Weigh up your options Could delegation help?

1 in 3 trust-based and 1 in 5 contract-based schemes

expect to move to master trust over the next five years

50% increase

in the numbers who have not reviewed their provider in the last three years

Two-thirds want to spend more time on communications

Fit for the future? What are the desired outcomes?

Average default contribution rates are around 10%

Two-thirds of respondents do not know what level of pension outcome their default rates will deliver

Only 5%

of schemes have a put a drawdown solution in place separate to their existing accumulation provider

Made to measure An ever-changing investment landscape

1 in 5 default investments still target annuity purchase at retirement

Charges for default funds are falling

but underlying investment charges remain static

Only 1 in 10

assess their default investment options against ESG criteria, while 4 in 10 offer ESG funds as standalone options

Calibrate your comms We need to talk about pension plans and financial wellbeing

1 in 3

are communicating target levels to encourage employees to save more

Budgeting and non-pensions savings

are the two areas where most plan to expand

Most schemes do not measure levels of engagement

with their pension and wider wellbeing programmes

Aon DC Survey Summary 2020

Download summary

Responses were received from representatives of over 200 DC schemes, covering over half a million members and £50bn of assets.

Time spent meeting regulatory requirements in the wrong areas

Some of the biggest challenges being faced by respondents include:

Member engagement with pensions is low as measured by all indicators

Investment returns in an uncertain climate

Maintaining member acknowledgement/ enthusiasm that DC money is serious

Download Chapter 1 here

In this section, we explore how DC schemes measure up against others and also how they measure against their own aims and objectives. Do schemes have the information they need to do this accurately or are they shooting in the dark?

Download Chapter 2 here

The options for DC scheme structures are wide-ranging. Not only does a decision need to be made on the overall structure of your scheme, but also on who is responsible for the day-to-day tasks such as administration and investment.

Download Chapter 3 here

For sponsors, the ultimate outcome is for employees to be able to retire, but shorter-term issues can sometimes take priority, such as benchmarking benefit levels to peers or controlling costs.

Download Chapter 4 here

We are now nearly five years on from the Pensions Freedom changes which led many DC schemes to rethink their default investment approach.

Download Chapter 5 here

Both employers and trustees of pension schemes need to focus their attention on encouraging employees not just to save more, but to save at adequate levels for the standard of retirement they desire

Download Breakdown here

This research encompassed a wide range of DC schemes, including occupational trust-based schemes and Group Personal Pensions, as well as a broad range of scheme sizes.

Download Survey Results here

Get the measure of how the UK market is changing with Aon's 2020 Defined Contribution Pension Survey results.