Aon survey says White Paper measures will offer better protection to pension schemes

Aon, the leading global professional services firm providing a broad range of risk, retirement and health solutions, has said that two-thirds of respondents to a recent survey stated they believed that members’ benefits in defined benefit schemes will be better protected in the future as a result of the recent Department of Work & Pensions (DWP) White Paper which proposed the new DB Chair’s Statement and additional powers for the Pensions Regulator (TPR).

Survey
The survey of 140 pensions professionals, including trustees, pensions managers and finance staff with pensions responsibilities, took place on a recent Aon webinar focused on the DWP White Paper and TPR annual funding statement.

Lynda Whitney, partner at Aon, said:
“The responses to the survey on our webinar gave a clear indication that the pensions industry hopes that changes proposed in the White Paper will provide better protection to schemes in the medium- and long-term.  Even so, many of the powers can only come into force with legislation, so it will take up to three years to get to this position.”

Funding Code
Supporting this overall view, 44% of respondents said that they wanted the new Funding Code to be either a bit or a lot more prescriptive, whereas only 14% wanted it be a bit less or a lot less prescriptive.

Lynda Whitney, said:
“We expect to see a consultation on a new Funding Code from TPR in 2018.  However, only 7% of respondents said they wanted a revised Funding Code to be a lot more prescriptive, indicating a conclusive rejection of a Minimum Funding Requirement II.  I believe that trustees are looking for a little more prescription along with clearer guidelines, ranges and examples - but still retaining the ability to reflect scheme and company specific circumstances.  They want more certainty about when they will get support from TPR if they reject an employer’s funding proposal.”

Annual Funding Statement
In the short-term, respondents said that they believed that this year’s Annual Funding Statement by TPR would not have significant impact. The majority (57%) of respondents said that the pension scheme’s share – compared to other stakeholders – would remain unchanged. 42% were hopeful that a pension scheme could get a larger share in a 2018 valuation, but 41% thought they would only get a slightly larger share.

Lynda Whitney said:
“Although there is hope in the longer term that the DWP White Paper will provide a significant shift for DB pension scheme security, there is still some scepticism about this year’s Annual Funding Statement and the suspicion that it will only offer slight improvements”

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About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.