UK - More than 50% of trustees believe their defined benefit (DB) scheme will last more than 20 years into the future, suggesting there is a "significant communication gap" with employers, Aon Consulting has claimed.
A survey of more than 250 DB scheme trustees, conducted by the consulting firm, showed 80% of respondents think their pension plan will still exist in 10 years, while overall trustees ranked the threat of wind-up as the least important issue facing the scheme.
However, Aon pointed out this is contrast to 50% of employers who predict the DB scheme they sponsor will have wound up within a decade - a view shared by just 20% of the trustee respondents.
As a result, the firm suggested the conflict in expectations highlighted a "significant communication gap" between trustee boards and sponsoring companies, because while sponsoring employers are prioritising efforts to minimise or remove the effect of DB schemes on their financial results, trustees are failing to acknowledge this.
Paul McGlone, principal and senior actuary at Aon Consulting, said: "It is worrying that there is such a large expectation gap between trustees and employers over the longevity of pension schemes."
He pointed out it is "fundamental" for trustees and sponsoring employees to have a shared view as it impacts on how all of the big issues affecting pension schemes are addressed.
"Without a commonly shared-view, there is unlikely to be agreement over actions, and there is a danger that one party takes decisions that are a hindrance to the other. We recommend that that both parties should always take steps to agree shared expectations about the pension fund lifespan," added McGlone.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
No comments yet