Short-term actions are dominating the thinking of many defined contribution (DC) schemes as the coronavirus pandemic continues, Aon research finds.
Over a third of respondents (40%) to a poll conducted at the consultancy's 2020 DC & Financial Wellbeing virtual conference said they had not yet considered their long-term objectives as short-term actions had dominated their thinking.
Head of DC consulting Ben Roe said: "It's clear that for some schemes, the sole initial focus has been on the immediate challenges - in whatever way they have presented themselves.
"That's no surprise - the combination of market volatility, resource constraints or administrators with differing levels of ability to adapt to new ways of working, would exercise any scheme."
However, the consultancy said the current and expected effects of the pandemic and also caused many DC schemes to make propositional and strategical reconsiderations.
More than half had reviewed objectives for their DC plans following the first six months of the year, and 20% said they had made subsequent changes to get back on track following this.
Roe continued: "It is key for schemes to ensure that their immediate crisis resilience plan response is effective in the short term, before also considering the longer-term impact."
He added that the ongoing effects of the pandemic have provided schemes with a much-needed chance to re-evaluate approaches to administration and investment.
"The last four months have provided plenty of challenges and UK DC schemes have had much to think about," he said. "This Covid-19-driven reassessment is also beginning to lead to a more fundamental review of the way schemes are operating, with one in four schemes considering changes to the way they are run or administered."
In line with that, Aon also found 1 in 7 sponsoring employers have already started to consider cost savings that are likely to impact their DC schemes.
Despite the estimated 9.3 million Britons that have been furloughed, few DC scheme members have made use of flexibilities offered by The Pensions Regulator so far and reduced their contributions.
Roe said: "Whether this manifests itself through lower company contributions or a reduction in budgets for communication or governance support, it is likely to be detrimental to DC members over the longer term. Similarly, it may be that the furlough scheme has kept down the number of individual members reducing their level of pension contributions so far.
"Either way, both these situations could become more widespread as Covid-19's economic impact is felt more broadly. This will put the onus on those in charge of running schemes to retain the ability to stay flexible and to be capable of adjusting their planning in line with whatever transpires over the coming months and years."
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