80% of trustees predict that their defined benefit (DB) pension schemes will still exist in ten years, despite 50% of employers predicting scheme wind-up within the next decade. This is according to research released today by Aon Consulting, a leading pension, benefits and HR consulting firm.
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Aon Consulting surveyed over 250 trustees of Defined Benefit (DB) schemes on when they expected their DB scheme to wind-up. A minority of trustees (20%) thought their scheme would be wound up within a decade. However, four fifths (80%) predicted that their scheme would still be in existence in ten years, and over half (52) thought that the scheme would last in excess of 20 years.
The results are a stark contrast with the expectations of employers, as measured by Aonís most recent employer survey in 2007. That survey showed that 50% of employers expect their DB pension scheme to be wound up within ten years.
The conflict in expectations suggests a significant communication gap between trustee boards and sponsoring companies. Whilst it seems to be a priority for sponsors to minimise or remove the effect of pension schemes on their financial results, this is not acknowledged by trustees. Indeed, when asked to rank the importance of issues facing their pension scheme, trustees ranked pension scheme wind-up as the least important issue. This lack of commonality could lead to problems over how issues affecting pension schemes are addressed and cause greater conflict.
Commenting on the survey results, Paul McGlone, principal and senior actuary at Aon Consulting said: ìIt is worrying that there is such a large expectation gap between trustees and employers over the longevity of pension schemes. 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.î
Aon research highlights conflict between trustees and employers over pension scheme longevity
Lack of shared expectation between employers and trustees raises communication concerns
