LONDON, 21 October 2022 – Aon plc (NYSE: AON), a leading global professional services firm, has outlined significant concerns around the inflexibility and potential consequences of the UK Department for Work and Pensions’ consultation on the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2023.
These views were reflected by Aon clients in a webinar on 26 September, in which 80 per cent of respondents to polling questions expressed concerns over the new funding regime’s direction of travel. Within that 80 per cent, 20 per cent of them said they were “very concerned”.
Matthew Arends, partner and head of UK Retirement Policy at Aon, said:
“While we support the overall objective of the draft regulations, we do have major doubts over whether the proposed legislation is sufficiently flexible and whether the consequences of these potential changes have been properly addressed.
“However, we agree that trustees of maturing schemes should consider a long-term target that covers both investment and funding level, as well as establishing a plan to move towards the target as the scheme becomes more mature. All this should be done with the employer’s agreement.”
Aon also outlined its views on the potential unintended consequences if the regulations are enacted in their current form, such as:
- A less flexible funding regime that cannot readily adapt to new forms of volatility and changing financial conditions, and which compels all schemes to adopt very similar strategies based on a particular understanding of risks.
- Higher pension costs for UK companies, which will restrict economic growth.
Matthew Arends continued:
“With the absence of a proper impact assessment, along with the lack of a response from The Pensions Regulator to its 2020 consultation on scheme funding, these concerns remain. Schemes need continued flexibility and greater certainty to make better decisions.”
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Media Contacts:
Colin Mayes
Aon
+44 (0)7801 748138
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James Hartwell
Kekst CNC
+44 (0)7870 487532
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