The biennial survey saw responses from 185 UK schemes, with 4.5 million members and £500 billion of assets. Most apparent among the findings was the growing appetite for de-risking and the increasing range of actions being taken.

Matthew Arends, partner at Aon Hewitt said: “The UK findings of this year’s Aon Global Pension Risk Survey report that just 4% of respondents had implemented an Integrated Risk Management (IRM) plan with actions, and 46% either had no IRM plan or had not documented it. This is despite this year’s Pensions Regulator’s (TPR) annual funding statement stating that “all schemes need to put contingency plans in place” and “[that] this contingency plan needs to be agreed with the employer in advance and should be legally enforceable”.

“That is an ambitious target and does raise the question of how far UK pension schemes are from this goal. But this year’s survey would suggest that they may be closer than is at first apparent, as schemes have clearly taken significant actions to manage their risk effectively in the two years since our last survey. For example, 89% of schemes now report that they monitor their technical provisions quarterly or more frequently (96% for the assets).”

Matthew Arends continued: “It’s also clear that the two risk settlement measures of bulk annuity purchase and longevity swaps that were largely the domain of smaller and larger schemes respectively, are now both becoming commonplace across the whole range of scheme sizes. This gives a context to our next finding.

“Approximately 90% of schemes have a long-term low risk or buy-out objective, and the time estimated to reach that objective has reduced from an average 12.0 years to 11.1 years since 2015 – despite the low gilt yields schemes have experienced.

Full Content: Actuarial Post

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