Partner Insight: Member engagement with pension schemes is increasing, giving administrators ever more interactions to deal with. In this article, Aon looks at the increase in requests relating to scheme transfers.
The introduction of Pensions Freedoms in 2015 introduced a new range of flexibilities to DB members, most of which are accessed by members transferring out of their existing DB scheme and into a DC arrangement. For administrators, this has changed the volume and nature of enquiries, with a significant increase in the number of queries relating to potential transfers. Ultimately, of course, administrators also face the work involved in taking many of these queries to fruition as members decide to transfer out of DB arrangements.
The changing landscape for transfers:
Aon's Member Options Survey, carried out in 2018, evidences these increased volumes of transfer enquiries and requests. The survey examined the actions of around 300 DB schemes in response to pensions flexibilities. 90% of schemes surveyed reported an increase in transfer volumes, with 40% seeing a significant increase. This mirrors the increases we have seen across our administration business, where there has been a sevenfold increase in transfers settled since 2014. Over the same period, our own data also shows a 13x increase in the number of transfers over £0.5m. For some schemes, this has required some fresh thinking around cashflow management to ensure members' expectations are met while disinvesting an appropriate asset type at the right time.
Anticipating the need for increased resource:
Administrators need to plan for the resource implications of these increases, and target this resource where it is most needed. Understanding the changing patterns in enquiries is essential to this, and good administrators will mine their own management information to see where they can expect increased call and email volumes. For instance, our own data shows that the largest increases in enquiries have been among members aged 55+ and so it is among schemes with a more mature non-pensioner population where the transfer-related work has increased most. Matching these changing behaviours against scheme profiles and planned projects can identify where the ‘spikes' might be and ramp up resource to meet them.
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