LONDON, 17 November 2006 – Suggestions that the Pension Protection Fund (PPF) should revise the levy setting process, will leave companies and pension schemes unable to budget properly.  This is according to Aon Consulting, a leading pension, benefits and HR consulting firm, which is calling on the PPF to reject suggestions to delay setting the levy scaling factor until after the March 2007 deadline. 

According to Aon, the PPF is considering setting the 2007/08 scaling factor on 30 March 2007 rather than the several months notice given ahead of the 2006/07 deadline on 31 March 2006. The new approach would make it far more difficult for companies and pension schemes to plan for the impact of levies on finances.

Paul McGlone, principal and actuary at Aon Consulting, said: "The new approach being suggested would clearly be beneficial to the PPF as it would give them far more certainty over the total levies collected each year.  The importance of this can be seen from the 2006/07 figures, where an expected levy of £575 million became an estimated levy of £324 million due to market conditions and the actions taken by companies and trustees in advance of 31 March 2006.  However, this certainty for the PPF would be at the cost of uncertainty for companies.

"It would mean that individual company levies could not be estimated in advance.  This would play havoc with budgeting processes and leave companies without the necessary information required to take decisions.  A company considering a cash injection into their pension scheme may reach a very different conclusion depending on whether the scaling factor is 0.5 or 1.  A move such as this would go against the grain of the consultative and business friendly approach the PPF has adopted since its formation."

Aon understands that the PPF may consult on the change before putting it in place and is calling on the PPF to ensure that a proper consultation with the industry is held before taking any such action. 

In addition to looking at the potential 2007/08 levies Aon, on behalf of its clients has been evaluating the 2006/07 invoices being sent out by the PPF.  When reviewing these levies Aon has, like many other companies, spotted a number of errors in the invoices issued and arranged for revised invoices to be issued. 

However, McGlone counselled caution against criticising the PPF too heavily, commenting: "To date we have spotted errors totalling millions of pounds on behalf of our clients.  It should be noted however that the vast majority of invoices are correct.  Some errors are understandable given the scale of the PPF's operation and the fact that this is the first year that such complex levies, with substantial data requirements, have been collected.  The PPF have an extremely difficult job to do. We would urge companies and trustees to check their invoices carefully and raise any concerns directly with the PPF or through the appeals process."

Notes to editor:

About Aon Consulting

Aon Consulting is a leading human capital consultancy, helping organisations of every size to attract and keep the employees they need. We advise on all aspects of employment, including health-related insurance and risk; employee compensation and pensions; human resource strategy planning; job design and change management; and staff assessment and legal issues. Aon Consulting is a division of Aon, one of the UK’s largest insurance brokers and providers of risk management services and a major force in reinsurance and the UK human capital consulting market.  Aon Consulting Limited is authorised and regulated by the Financial Services Authority.

About Aon

Aon Corporation is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 46,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to execute the stock repurchase program, our ability to consummate the pending sale of the Aon Warranty Group, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s filings with the Securities and Exchange Commission.

Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.