LONDON, 11 December 2024 – Aon plc (NYSE: AON), a leading global professional services firm, has said that the trend for insurers in the UK bulk annuity market to improve options available to members and to give access to independent financial advisers (IFAs) at retirement, will continue and grow in 2025.
The tendency for pension schemes to provide options within the defined benefit scheme and IFA advice when members retire, has become well-established in recent years. In Aon’s 2024 Member Options and Support survey, nearly 40 percent of schemes said they expected to provide IFA support by the end of next year.
However, 2024 also saw more bulk annuity insurers developing their thinking in this area. This comes at a time when funding level improvements have meant that more schemes are planning an approach to the insurance market. Over 54 percent of schemes in Aon’s 2024 survey quoted buyout as a long-term target.
Kelly Hurren, partner and head of member options and support at Aon in the UK, said:
“Historically, schemes might have taken it as given that some of the improved support and additional options available to members at retirement would fall away at buyout. But now, trustees are increasingly asking if it’s possible to keep these benefits. In our conversations with them, their unanimous feedback was on the need to focus discussions more heavily on the member experience - and for it to be front of mind for schemes ahead of approaching the insurance market. We’ve been alerting insurers to this situation for the last few years.
“But in 2024 we’ve really started to see insurers develop their thinking in this area. Our survey at the start of the year, showed that half the insurers in the market would consider making options at retirement available. One insurer has gone on to announce that they are offering IFA advice to policy holders after buyout. Professional trustees have also welcomed this development.”
Kelly Hurren continued:
“It’s relatively early days on this – but it’s a development we are pleased to see. In our view, it’s a movement that will really kick on, to the extent that it will be the biggest change in the member options and risk settlement space next year. We know a number of large insurers are seriously considering options for offering IFA support post-buyout, so you can expect this area to continue developing - there will be other insurers to follow.”
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