LONDON, 06 November 2008 - An overwhelming 94% of organisations have failed to discuss the issue of personal accounts at a governance, trustee or board meeting, according to Aon Consulting, the leading UK pension, benefits and HR consulting firm. Aon’s survey of small, medium and large organisations revealed a worryingly low level of corporate awareness around this issue.

Aon Consulting urges companies to start planning now in order to tackle potentially the largest administrative task in corporate history.

Aon’s research coincides with today's welcome announcement by the new pensions minister, Rosie Winterton, that she will allow "room for manoeuvre" for employers to "self-certify" that the contribution structures on their existing pension arrangements are at least equal to those proposed on personal accounts. Helen Dowsey, principal at Aon Consulting, said: "This is an important clarification that will enable employers to plan more easily and significantly reduce the administrative burden that may have been required."

Despite a lack of clarity from the government on a number of other key points, however, companies should be taking action now to prepare for personal accounts' introduction in 2012. One pivotal area where employers with contract-based arrangements can act is automatic enrolment, which the Department of Work and Pensions (DWP) has stated will be introduced in 2012 to coincide with personal accounts. 

Helen Dowsey, urges businesses to act: "The picture for employers will hopefully become a lot clearer once the government has clarified a number of areas with the enactment of the pensions bill. That milestone should act as the catalyst for businesses to accelerate their preparation for personal accounts.

"Employers should lobby via their advisers, or the Association of British Insurers or DWP directly, to have provision for automatic enrolment on contract-based arrangements brought forward.  As an immediate alternative, employers can change the wording on new contracts of employment to enroll new employees into a contract-based arrangement now, but this does not answer the question of what to do with existing employees who have chosen not to join."

There are three other  areas the DWP needs to clarify before employers can get a fuller idea of what changes they will have to make to ready themselves fully for personal accounts.  Outstanding points needing detailed guidance from the DWP include:

1. Confusion over communication of information on PAs from employer to employee (it will be a legal requirement that employers give information to employees but it will be illegal for them to give formal advice)
2. Interaction between PAs and means tested benefits needs definition
3. Charging structure needs to be defined

The pensions bill is due to be enacted later in November and should provide clarification on some of these points.  Helen Dowsey said: "It is a cause for concern that over 90 per cent of businesses have not discussed personal accounts - one of the biggest corporate administrative tasks ever undertaken - at a trustee or board meeting. 

"Employers and trustees should raise the topic of personal accounts at board meetings so that FDs are alerted to the potential costs needed in additional contributions as well as the impact on payroll and administration processes.  Businesses may not be able to make many decisions now but it is definitely worth getting the ball rolling as critical decisions will need to be made in the near future."

Ends

For more information contact
Susie Patterson / Leo Wood
0207 269 7233 / 137
susie.patterson@fd.com / leo.wood@fd.com

David Skapinker
020 7505 7478
David.skapinker@aon.co.uk
http://aon.mediaroom.com 
 
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 (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's best broker by Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

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