LONDON, 7 December 2012 – Aon Hewitt, the global human resources solutions business of Aon plc (NYSE:AON), has welcomed the proposal that the Pensions Regulator should have a new statutory objective to consider the long-term affordability of deficit recovery plans to sponsoring employers.

Kevin Wesbroom, partner at Aon Hewitt, said:
"In many discussions between trustees and employers, the critical part is what contributions are "affordable" rather than the level of Technical Provisions. While this will not make the Pensions Regulator's job any easier, the proposed new objective will lead to a more balanced view between the interests of members and sponsors.

"The recognition that the current low interest rate environment is having an impact on the way in which pension funds' liabilities are calculated and how deficits are reported and dealt with by companies, is a positive step. We welcome the idea of a public discussion of these issues - but we are not convinced that smoothing is the right way forward. In our view, there is sufficient flexibility in the current regime – as long as the Pensions Regulator, employers, trustees and all advisers take full advantage of the flexibility already in the system."

Kevin Wesbroom continued:
"We urge all parties to focus on the true risk and return characteristics of their scheme portfolios and to then relate this back to the new low yield environment.  We believe the current system permits reversions from current low gilt yields to be factored into either Technical Provisions or Recovery Plans. There is no reason for companies to feel they are being forced to pay additional contributions as a result of any perceived distortions in government bond markets. However, this does require the Regulator to accept the full flexibility in the current regime and for all parties involved in negotiations on Recovery Plans to arrive at sensible, 
well-reasoned and defensible outcomes.

"They should always be exercising judgement, rather than blindly following fixed methodologies - which have an inconvenient habit of breaking down. The Minimum Funding Requirement regime, the 'Gilts plus' methodology and the 'Inflation plus' methods were all tools which have been shown to have their limitations in changing market conditions. A 'method' has proved to be no substitute for expert informed judgment."

Media Contact: 

Colin Mayes                                      Adam Leviton
 Aon Hewitt                                        Capital MSL
 01372 733689                                  020 7307 5339
colin.mayes@aonhewitt.com        adam.leviton@capitalmsl.com

Notes to Editors

About Aon Hewitt 
Aon Hewitt is the global leader in human resource solutions.  The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance.  Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.  With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com.

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About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.