Industry Voice: Kelly Hurren, Senior Consultant at Aon, discusses how DB schemes are responding to 'Freedom and Choice'.
Sponsors and trustees have an important role to play in deciding what options to make availble to members and how much member support should be in place.
We conducted a Member Options Survey in 2018, which covered 300 DB schemes and the actions they have been taking in response to pension flexibilities.
The survey told us that 90% of schemes have seen an increase in requests from their members for transfer values over the last 18 months, with around 40% seeing a significant increase.
This has led to around 30% of the schemes questioned taking action to automate a greater proportion of the transfer value calculations that are carried out by scheme administrators
Change in trustee attitude
For many years, proactively talking to members about the transfer value options was considered to fall under the remit of the sponsor, with trustees much more likely to take a reactive response to requests.
However, we are increasingly seeing trustee boards being more proactive in this area, potentially driven by an increased interest from members and a desire to ensure that members have all the information they need to make informed decisions about their retirements.
In fact, some lawyers are openly offering the view that it could be considered to be more risky not to proactively provide members with details of the transfer value option at retirement.