Aon plc, a global professional services firm, has announced that the trend of UK bulk annuity insurers expanding member options and offering access to independent financial advisers (IFAs) at retirement will continue to grow throughout 2025.
In recent years, it has become increasingly common for pension schemes to offer options within the defined benefit scheme and to provide IFA guidance when members retire.
Aon’s 2024 Member Options and Support survey revealed that nearly 40 percent of schemes plan to offer IFA support by the end of next year.
Additionally, 2024 saw more bulk annuity insurers refining their strategies in this area, driven by improved funding levels, which have prompted more schemes to explore the insurance market. According to Aon’s survey, over 54 percent of schemes are targeting buyout as a long-term goal.
Kelly Hurren, Partner and Head of Member Options and Support at Aon UK, added: “Historically, schemes might have taken it as given that some of the improved support and additional options available to members at retirement would fall away at buyout. But now, trustees are increasingly asking if it’s possible to keep these benefits.
“In our conversations with them, their unanimous feedback was on the need to focus discussions more heavily on the member experience – and for it to be front of mind for schemes ahead of approaching the insurance market. We’ve been alerting insurers to this situation for the last few years.
“But in 2024 we’ve really started to see insurers develop their thinking in this area. Our survey at the start of the year, showed that half the insurers in the market would consider making options at retirement available. One insurer has gone on to announce that they are offering IFA advice to policy holders after buyout. Professional trustees have also welcomed this development.”
Hurren continued: “It’s relatively early days on this – but it’s a development we are pleased to see. In our view, it’s a movement that will really kick on, to the extent that it will be the biggest change in the member options and risk settlement space next year. We know a number of large insurers are seriously considering options for offering IFA support post-buyout, so you can expect this area to continue developing – there will be other insurers to follow.”
