New research has revealed that pension schemes offered in the UK are making progress when it comes to lowering their level of risk and that companies are using a wider range of tools to do so.
The Aon Global Pension Risk Survey 2017 found that although UK providers still have some way to go, it is encouraging to see schemes managing their risks more effectively than when the last survey was conducted two years ago.
Partner at Aon Hewitt Matthew Arends explained that The Pensions Regulator now expects all schemes to have contingency plans in place, and that these plans need to be agreed with the employer in advance, as well as legally enforceable.
He noted that given the lack of schemes that have introduced an integrated risk management plan, UK providers may seem to be struggling to meet this condition. However, he added that the survey indicates many schemes are “closer than is at first apparent, as schemes have clearly taken significant actions to manage their risk effectively”.
An example of how they’re doing this is through regular monitoring of technical provisions, with 89 per cent stating they do this quarterly or more frequently.
The survey also found that a growing number of pension schemes are diversifying their asset classes, and are looking at ways to reduce their reliance on equities.
Earlier this year, The Pensions Regulator set out its priorities for the coming three years, noting that it plans to increase the resources allocated to its frontline regulatory teams, as well as working with the pensions community to deliver a “sustainable approach” to regulating workplace pensions.
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