LONDON, 18 March 2015 - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that the pension freedoms announced in today’s Budget Speech should be extended to pensioner members of defined benefit (DB) schemes.

Today’s announcement from the Government has demonstrated that they are committed to providing pension scheme members with more flexibility to choose how best to spend their pension benefits. Aon Hewitt estimates show that the combined value of total DB pensions in payment is more than 10 times bigger than the value of annuities in payment in the UK.

Ben Roe Head of Liability Management at Aon Hewitt, said:
“Now that members with annuities in payment have access to the new flexibility, the next obvious question is should this be allowed for defined benefit pensioners as well?

“At the moment, DB members need to transfer their benefits to a defined contribution (DC) scheme in order to access the flexibility - and current legislation makes this nigh on impossible for DB pensioners. We know that the Government is intending to consult on whether members should be able to access their benefits directly from a DB scheme, so this provides an ideal opportunity to provide more flexibility for DB pensioners.”

Ben Roe continued:
“There are a number of options which could provide DB pensioner members with more flexibility.  This could start with providing members with the right to transfer their benefits out of the scheme. As a middle ground it would be possible to allow members to ‘cash out’ the value of the future pension increases. This would ensure that members are left with a minimum level of secure income.  It would also provide some protection for trustees and scheme sponsors from the selection risk  - (where members in poor health would be most interested in transferring assets out) - which this would introduce.

“However, the key to this - as with any option - is to make sure that members can make a genuinely informed decision – so provision of independent financial advice will be vital.”

Media Contact:
Colin Mayes                                        Marina Jane Sanchez
Aon Hewitt                                          CNC
01372 733689                                      020 3219 8811
colin.mayes@aonhewitt.com                marina.jane-sanchez@cnc-communications.com
 

Notes to Editors

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  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 66,000 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, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.