Research reveals 'significant' shift in member behaviour amid CofL crisis

One in five defined contribution (DC) pension schemes reported an increase in requests to reduce contributions or opt out of pension saving, while one-in-six have seen an increase in requests for early access to pensions savings, research from Aon has revealed.

Aon's DC Today survey revealed a “significant shift” in members’ behaviour as they to current economic challenges and recent market volatility, with a further 43 per cent of schemes also reporting increase in queries or concerns about investment performance.

In addition to this, 10 per cent of respondents reported an increased interest in investment switching, with Aon warning that this "may be a cause for concern" as the values of a broad range of assets are depressed, meaning savers could be crystalising losses.

However, the survey revealed that many DC schemes are looking to increase the support for members amid the current economic challenges, as nearly half (46 per cent) of DC schemes have or are considering putting additional support in place amid the cost-of-living crisis.

A further 22 per cent of respondents stated that they are improving communications about the support that is already available, while almost half (47 per cent) of schemes have issued additional communications, and a further 23 per cent are considering doing so.

More than a quarter (26 per cent) of respondents are also, or are considering, allowing additional flexibility for members around contributions.

Commenting on the findings, Aon associate partner, Steven Leigh, stated: “Recent economic challenges, including high inflation and the impact on the cost of living, have had a considerable impact on people’s finances.

“It is concerning, but perhaps not surprising, that one in five DC pension schemes report an increase in members reducing or ceasing their pension contributions. While this action may help individuals alleviate short-term pressures, it risks leading to a significant reduction in their retirement income."

“In order to make up this shortfall, savers would have to pay increased contributions each and every year until retirement. Therefore, it’s vital that the implications of opting out of workplace pension saving are fully communicated and understood before people take this step.”

    Share Story:

Recent Stories


Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios