MetLife Assurance research: Half of DB pension members are concerned about the scheme’s survival

Half of employees in defined benefit (DB) pension schemes are concerned about the long-term survival of the scheme, according to research by pensions risk transfer provider MetLife Assurance.

The research, which surveyed 765 employees and 462 employers, found that 38% of employee respondents are quite concerned about their retirement income. When split into pension scheme type, 46% are in a DB pension scheme, 39% belong to a defined contribution (DC) pension scheme, and 35% are not a member of any pension scheme.

When asked about their understanding of their pension scheme, 51% responded that they understand it well or extremely well, while 49% have a poor or average understanding.

One in four employers surveyed believe they could do more to educate employees around their pension scheme.

Employers were also asked about their awareness of de-risking pension strategies for DB pension schemes. Almost half (45%) of respondents were unaware of any de-risking strategies.

A quarter (25%) are aware of pension transfer buy-ins, 16% are aware of asset allocation/investment strategy, 15% are aware of longevity swaps, 15% are aware of pension transfer buyouts, 8% are aware of pension increase exchanges, and 5% are aware of enhanced transfers or trivial commutations.

Employers also had a low awareness of regulatory changes that impact pension schemes, with 56% unaware of any changes. One-third (29%) are aware of the removal of the default retirement age (DRA), 23% are aware of auto-enrolment, and 18% are aware of the move from the retail prices index (RPI) to the consumer prices index (CPI).

More than a third (38%) of employers have not yet reviewed how auto-enrolment will be paid for. For those that have reviewed a plan, 16% are less likely to recruit new staff, 12% will absorb the increase in cost, 9% will reduce other expenses, 7% do not expect a cost increase, 7% will reduce or cap salaries or bonuses, 7% will reduce their other benefits on offer, and 2% will reduce their existing pension contributions.

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