London, 31 July, 2013 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), has reported the results of a poll of over 750 delegates at Aon Hewitt's annual pension conferences, on the potential impact of government reforms under the banner of defined ambition (DA).

Kevin Wesbroom, senior partner at Aon Hewitt, said;
"We are encouraged that there appears to be broad support for the initiatives the Pensions Minister, Steve Webb, has developed under the defined ambition heading. The attendees at our conferences represent a large cross section of informed participants and professionals in the pension industry and their attitudes - reflected in our survey - should give encouragement to the government as it develops its thinking on defined ambition schemes.

"The results, from delegates in six major UK cities, indicate a groundswell of opinion that current pension scheme solutions are sub-optimal and that the pensions industry may be failing its scheme members if we do not seek structures and systems that can deliver better outcomes."

The concepts behind the three work-strands on defined ambition detailed by the DWP earlier this year were explained at the conferences and delegates were then asked a direct question about defined ambition:  "Where should we spend our effort, your energy, and the government's money?"

Only 21% of the 757 responses said they felt the current pension system was fit for purpose and that they were satisfied with existing defined contribution (DC) and defined benefit (DB) schemes. Support for the DB Lite proposals was relatively modest at 14%, suggesting that most sponsors and schemes feel the future of pensions will have little or no DB exposure. However, there was widespread support for looking to improve the outcomes from DC schemes, with 34% in favour of the DC Plus work-strand, and 32% in favour of Collective DC solutions.

Kevin Wesbroom continued:
"It seems clear that the industry believes that we could – and should – try harder to deliver better outcomes for our DC members.

"The broad support for Collective DC solutions was even more encouraging, and significantly more favourable than the generally negative stories one sees about these approaches. We pressed our delegates on their concerns about the Collective DC approach – which despite any potential downsides - has the potential to deliver higher, and more stable, outcomes for members than conventional DC schemes."

The biggest issue surrounding defined ambition schemes is often expressed as a concern that future governments would intervene or change policy in a way that adversely impacted employers. Some exploratory work has been done to see if legislation could be made stronger to give greater protection. Delegates were asked if they believed this approach to legislation could be made to work - and in a way that could persuade them that they could trust government and look further into Collective DC options.

Kevin Wesbroom said:
"Regrettably, just 18% of the respondents said they did trust government not to intervene in the future - meaning that an overwhelming 82% did not. They have seen the pensions goal posts moved too many times to feel confident this will not happen again."
 
Interestingly, delegates were far more balanced about the prospect of having to explain what might be called 'soft guarantees' to members – this would be where there is an intention to pay a particular benefit level which might not - in extreme circumstances - be paid in full. In all, 44% of delegates said they thought this could be overcome, with 56% saying it could not. This at least indicates an industry belief that there is hope to address communication issues for the new types of pension approach that the government is considering.
 

Media Contacts:  
Colin Mayes                                     Giles Abbott
Aon Hewitt                                        Capital MSL
01372 733689                                   020 7307 5340
colin.mayes@aonhewitt.com              giles.abbott@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.