LONDON, 22 May 2013 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has urged smaller UK pension schemes to look closely at current opportunities with medically underwritten annuities.

With bulk annuities, modelling of life expectancy has been developing to make better use of pension scheme information – chiefly post codes, benefit size and the nature of the employer's business.  The individual scheme member is not asked to give extra information and this helps keep the pricing process simple. Medically underwritten annuities differ in that the pricing takes account of additional information about an individual's health and lifestyle.

There are now four annuity providers at different stages of offering medically underwritten annuities to the UK bulk annuity market: Partnership and Just Retirement - which are already key players in the individual market for this form of underwriting - plus Legal & General and Aviva. This is still a rapidly developing market, so Aon Hewitt is encouraging small schemes to move quickly as this could be their best chance to secure favourable pricing terms.

Dominic Grimley, principal consultant in Aon Hewitt's Risk Settlement Group, said:

"It is unusual for small schemes to have the best opportunities, but as the market begins to gain momentum, providers are keen to gain a foothold and prove the concept – and that can lead to the kind of attractive pricing that is currently available.

"While medically underwritten annuities will not be feasible for securing large pensioner populations, there is currently a window of opportunity to secure annuities on appealing terms for deals for up to 300 pensioners. This reflects the providers' desire to develop the market - and potentially has no impact on cash funding requirements."

Dominic Grimley continued:

"Schemes should consider how the bulk annuity market is changing and decide if this opportunity is right for them. Understanding the feasibility of the options available is important from a scheme governance perspective and potentially for the sponsor's bottom line too."

Media Contact: 

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

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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 retirement 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.

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.