Pension funds are reviewing their investment performance more frequently “underlining the importance of performance management”, according to an Aon survey.

In its annual survey, with more than 200 participants, Benefits and Trends Survey 2018, Aon found that 15 per cent of organisations now review their default option half yearly, up from 8 per cent in 2016, while annual reviews were done by 28 per cent of organisations, down from 39 per cent in 2016.

The results were seen as encouraging for scheme members, as the survey highlighted other key trends around financial education, employee engagement and scheme governance.

Aon Employee Benefits pension consulting lead, Martin Parish, said: “Investment returns form a key part of an employee’s retirement outcome, so monitoring default fund performance and structure is a key risk management measure that should be part of a formal governance process or discussed in meetings with advisers.

“It’s critical that organisations conduct a review of default funds to complement the flexibility that employees now have from the age of 55 or at retirement.”

The survey also found that more organisations are providing retirement services, with 44 per cent of firms offering pre-retirement seminars, while 27 per cent offer access to independent advice.

Furthermore, 82 per cent of companies continue to use email to engage with employees, while 63 per cent use printed communications and 45 per cent of employers provide face-to-face presentations.

Parish said: “It is not surprising that for all the noise in the market about engagement it still boils down to print and face to face communication. In our experience, the most positive feedback on engagement is received in the cases where we deliver face to face interaction with staff.

“However, this will likely be the one aspect of pension services that will change the most in the coming years. We expect to see employers, advisers and providers to look to deliver engagement mechanisms that mirror people’s wider social interaction methods – social media, web chat, video content etc.”

Furthermore, as automatic enrolment contributions are set to rise over the next few years, 56 per cent of firms said that they will need to increase their contributions for 2018 and 2019.

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