Teamwork the key as pensions sector prepares for a new era

It’s not the best start to a profile interview but sitting in Aon Hewitt’s Leeds office, Adrian Davis seems very nervous about how he might be portrayed.

“You must meet a lot of people for whom this is just a big ego trip but I really don’t want the big ‘I am’ here,” he insists.

If Davis, 43, is worried about coming across as egotistical he couldn’t be further from the truth.

Despite heading up Aon Hewitt’s consulting business in the North of England from Leeds, one of its biggest offices outside London with 220 staff, and playing a key role in the growth of its fiduciary business, he is keen to talk down his individual role and instead focus on the achievements of his team.

Aon Hewitt, which was formed following Aon’s acquisition of human resources specialist Hewitt Associates in 2010, advises more than 4,000 UK companies on various aspects of human resources with a particular focus in the Leeds and Manchester offices on pensions.

It advises trustees and companies on a range of issues surrounding defined benefit schemes, including legacy issues, pension deficits and how to invest capital.

“For many firms around Yorkshire, this is a hugely significant issue for them because they are having to divert a huge amount of their profit each year to servicing the requirements of their pension fund, which arguably has very little benefit to their existing employees,” says Davis.

It also advises companies on defined contribution schemes, helping employers package together suitable solutions for their staff.

The rise in life expectancy is one of the major societal issues facing companies. “The reality for many individuals is that they could have four decades of not working at the end of their career and that’s going to take a huge amount of funding,” says Davis.

He welcomes the new flexibility rules announced by Chancellor George Osborne in his Budget. From next April, retirees with a defined contribution scheme will be able to take their pension pot in cash instead of buying an annuity, a pre-set income for life, from a provider.

Since the start of the year, annuity rates have fallen by 3.2 per cent, according to information website Moneyfacts, resulting in lower pensions.

“We really welcome the new rules because giving the individual more control over their future retirement needs is really important,” Davis says. “Being locked into an annuity that is going to pay a pittance is not good government policy.”

Aon Hewitt is already reaping the benefits of the proposed changes and has seen double digit growth in consulting revenue from employers with defined contribution schemes who are proactively trying to help their employees make choices about their retirement options.

Auto-enrolment, which was launched two years ago, has also had a big impact.

Since 2012, millions of workers have been auto-enrolled into workplace pension schemes for the first time. Figures from the Pensions Regulator in August show that 21,000 employers registered by July 2014, enrolling over four million eligible jobholders into a pensions-saving scheme. “For me, what’s really pleasing is many of our clients have got very low levels of opt-out which suggests we’re doing something right,” Davis says.

Another area seeing double digit growth is the company’s fiduciary business in which trustees delegate the management of their pension scheme to Aon Hewitt. Since it was launched six years ago, the division has amassed over $49bn of pension fund assets under management globally. In the UK, the figure is £6.2bn with 69 schemes. When Davis joined Aon Hewitt he was tasked with leading its growth.

At the time there were six people in the fiduciary business. Now there are at least 66 between the London and Leeds offices, including 11 in Leeds.

“The growth is a response to the rising complexity of being a pension trustee today and the desire for corporates to get the best possible performance out of their pension schemes. The growth of the business is not just down to me, though, it’s a team effort,” he says.

Davis’s latest role is a culmination of around 15 years in professional services.

Born and brought up in Durham, he first moved to Yorkshire as an economics student at Sheffield University.

After completing an MBA a few years later, and with an interest in consulting, he joined the graduate training scheme at PwC in London where he worked his way up to director. He went on to work for a couple of outsourcing companies before joining EY as a director of market development.

He moved back to Yorkshire six years ago and was headhunted to Aon Hewitt in 2010, becoming head of consulting for the North of England in October 2013.

“Pensions are critical to the health of companies in the Yorkshire region and the people here are fantastic,” he says.

So, does he think the new pension legislation will change the public’s perception of the industry as boring? “The challenge we’re facing with many companies is educating our younger people and that’s difficult when they’re not of an age where they are considering such things,” he says.

He adds: “Our advice would be if you haven’t got a pension, start one tomorrow. That’s the most proactive thing you can do.”

Davis lives with his wife and two children in Harrogate and admits to being a “bit obsessive” about running and cycling. “My focuses are my family and keeping fit and healthy,” he says.