Aon has launched the Zone framework to support pension schemes with decision-making as the industry moves into a new environment, where improved funding levels provide more endgame options.

Aon recognised that while the traditional focus on de-risking journey plans and generating funds to close funding gaps remains a priority for some schemes, many are now looking for ways to maintain and build on their improved financial position.

It argued that this shift calls for fresh approaches to thinking about investment strategy, with the framework therefore designed to support investors in re-evaluating their objectives and exploring the new opportunities that are now available.

The framework consists of four segments, starting with zone identification. At this stage, schemes agree on their investment priorities, choosing between asset growth, downside protection or endgame execution to determine if they are in the growth zone, protection zone, or end game zone.

The next step is to optimise investment strategy based on priorities, then navigate opportunities to take advantage of market conditions, followed by evaluating progress against key objectives.

By clarifying objectives and defining risk for each scheme, the tool aims to provide insights into key downside scenarios, enabling a shift focus from traditional de-risking to portfolio optimisation.

This is inteded to help schemes to become market aware and size short-term opportunities while balancing risk management with growth. This balance ensures they avoid overly conservative strategies that could increase the risk of deficit re-emerging.

Aon associate partner in investment in the UK, Shelley Fryer, said: “With improved funding levels, we are seeing a shift from a traditional journey-focused strategy to a more stable 'zone' mindset, where investors can feel more comfortable with their current positions.

"By identifying which 'zone' they are in — growth, protection, or endgame — trustees and sponsors can set their priorities, implement strategies appropriate for their zone and ensure their monitoring is linked to those goals.”

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