By AON

We have been carrying out the Global Pension Risk Survey every two years for over a decade and it gives the industry great
insight into how the pensions landscape has developed. When the COVID-19 pandemic hit in early 2020, it created many challenges
for sponsors, pension schemes and their members. We saw sponsors and trustees reassessing the risks that they faced. While the impact was not negative for all pension schemes, there was a large market crash which had a varied impact on the funding level of defined benefit (DB) schemes — largely depending on the level of hedging they had in place.

At that time, we saw most pension schemes pause large projects, meetings moved to a virtual environment and those with pension responsibilities took time to reflect on managing risk within their schemes.

Since then, funding levels have generally recovered and, possibly as a result of that period of reflection, we have continued to see an increasing number of schemes select buyout as their long-term target. This continues a trend that has seen the popularity of buyout more than doubling over the last eight years to become the single leading long-term target for UK DB pension schemes.

At the same time, the timescale to reach schemes’ long-term targets continues to reduce, even despite the economic turmoil of 2020. It now stands at an average of 8.8 years compared to 9.4 years in 2019.

Get the book here