A growing number of UK defined benefit (DB) pension schemes are considering new options or providing additional support to members as part of their GMP equalisation strategies, a survey from Aon has revealed.

Its 2022 Member Options Survey, which gained the views of over 300 UK DB schemes, showed that, regardless of their chosen method for GMP equalisation, almost a third of schemes were using the process as an opportunity to improve the options or support members at retirement.

The survey confirmed the consistent upward trend since 2018 of schemes providing members with more support for their retirement decisions, as 32 per cent of the schemes surveyed reported providing additional support to members through online modellers and/or independent financial advice.

Additionally, the survey discovered that, where IFA support was provided, 67 per cent of schemes provided fully paid-for advice and almost 90 per cent planned to review their appointed IFA regularly, of which 40 per cent had a governance structure in place to do so annually.

Aon also revealed that 56 per cent of the schemes surveyed have run or are planning to run bulk member options exercises as part of their long-term strategies.

More than a quarter (27 per cent) of schemes surveyed had either started or are planning to consider how inclusion and diversity impacts the information and support members receive, whilst a third of respondents already have or are considering how ESG considerations impact the information and support provided to members.

Aon partner and head of member options, Kelly Hurren, commented: “In the 2022 survey results, there continues to be a clear trend of schemes providing members with more support when making retirement decisions.

“Many schemes that had been planning to act in this area are also separately in the process of tackling GMP equalisation and so, unsurprisingly, we are seeing schemes recognise the efficiencies of bringing actions in these two areas together and reviewing member options and support at the same time.

“It makes sense for trustees to make the most of the opportunity to increase the value of their GMP equalisation project.

“Aside from the efficiencies of making these changes at the same time - given that retirement processes need to be updated for GMPs anyway - this combined approach also brings value to members through additional choices and understanding, in what could otherwise be viewed as just a compliance exercise.

“Where schemes are heading towards a potential insurance transaction, trustees are taking the opportunity to communicate with members about their options before both the options and the support available irrevocably changes after the transaction.

“Despite inclusion and diversity being at the forefront of business plans in recent years, nearly two-thirds of the schemes surveyed have yet to consider this in the context of their member communication strategies.

"On the other hand, just over a quarter of respondents have considered or have plans to consider their communication strategies. We expect this to grow over the next year.”

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