Design
DB to DC
DC is commonly required where legal
- But 11% remain committed to DB
DC is common for new employees
- In Ireland 2/3 retain DB for existing members
- But in Asia-Pacific 40% remain open to all
In some countries DC retains guarantees:
- In Switzerland pure DC only for higher earners
- In Germany first ever pure DC recently established
Major reform is pending in the Netherlands
- Requires age-independent contributions
Operations
Monitoring regulatory change
Regulatory change is monitored more than financing risk:
- Monitored by 84% of global retirement committees
- Material concern for 59% of global survey respondents
Supporting employee financial wellbeing
Financial wellbeing of employees is a material concern for 65%
Increasing focus on operational risks
Operational risk governance is important in the UK, Ireland, Germany and Asia-Pacific.
- EU governance requirements are triggering interest in multi-employer plans
Managing cyber risks
Cyber risks are higher on local than global governance agendas:
- Only 14% of global respondents indicated cyber concerns
- 3 in 4 UK respondents had cyber training or intend to have soon
- Cyber risk assessment and insurance is common in Germany
- Swiss plans intend to retain cyber expertise and simulate risks
- All Asia-Pacific respondents intend to review cyber risks and mitigations
- US respondents indicated the least preparation or intentions
Long-term financing
Asset de-risking
De-risking is the main theme of long-term strategies:
- 90% have long-term targets in their largest countries
- 75% have long-term growth-asset targets
- But nearly 50% have no timeframe nor triggers
Settlement for insurers
Settlement with an insurer is the global aim for 30%
- Over 40% have already settled some liabilities
- Even more targeting settlement in the US & UK
- Lack of awareness of insurer interest elsewhere
- Record volumes of settlements globally in 2019
- Lack of data preparation is noted in some countries
Flexible options for members
Liabilities also increasingly settled with members:
- Lump sum options in many countries, most options in the UK
- In the US and Germany, statutory terms create periodic windows
Diversifying to alternative investments
Global investment guidelines exist for more than 2 in 3 companies:
- But guidelines lag the local diversification away from equities, less than 1 in 3 have guidelines for property, illiquids or hedging
- Lack of internal expertise in these areas is driving delegation of strategy execution
- The Netherlands seems to buck the diversification and hedging trends
- ESG gaining strong focus in most countries, but only 15% have global guidelines
- Within bond portfolios, low interest rates are driving focus from government bonds
- In Germany and Asia-Pacific there are growing trends towards holding assets
Delegation for expertise
Hedging interest rate risks
Liability management
Global Pension Risk Survey 2019
The Global Pension Risk Survey is Aon’s biennial survey of pension plan sponsors, trustees/fiduciaries and other pensions professionals. It has been running for a decade. Click below to view your country's report.
The survey explores the thoughts and risk management philosophy of those involved in DB pension decision-making, and the ways they plan to manage their DB assets and liabilities over the coming year.