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Aon Hewitt comments on the Pensions Regulator's guidance on funding
NYSE: AON

London, 2 December, 2013 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), has commented on the Pensions Regulator's guidance on funding, issued this morning.

Overview
Kevin Wesbroom, senior partner at Aon Hewitt, said:
"This new and detailed guidance from the Regulator put real emphasis on a greater understanding of risks, and the idea of pension schemes developing longer term plans. That is a positive step which reflects our own advice. However, we do remain concerned about how the guidance to deal with current 'unusual' bond markets should be translated into actions by trustees and sponsors."

On covenant issues
Aidan O'Mahony, partner at Aon Hewitt said:
"This consultation process is a positive step – the Regulator's "guiding principle" of integrated risk management which focuses on the three key risk areas of employer covenant, investment and funding, is a welcome idea.

"It is also good that the Regulator is being more transparent by providing information on how it ranks employer covenants, with four broad risk categories: "Strong", "Tending to Strong", "Tending to Weak" and "Weak, as well as outlining the funding behaviours it expects trustees and others to follow. For example, dividend leakage should be a trustee concern for those schemes with weaker covenants."

The consultation document also outlines a 'Balanced Funding Outcome' indicator (BFO) for each scheme it regulates. The BFO is linked to the strength of the employer's covenant as well as the scheme's maturity and it enables the Regulator to determine notional deficit repair contributions which can be compared to those in the scheme's recovery plan. A large gap between the Regulator's BFO and actual deficit repair contributions is a key risk factor when considering the need for regulatory intervention.

Aidan O'Mahony said:
"The BFO methodology should bring more rigour and consistency to comparing risks across different scheme valuations within a tranche (year) and across tranches (successive years)."

 

Media Contacts
 Colin Mayes                                        Adam Leviton
  Aon Hewitt                                         Capital MSL
  01372 733689                                     020 3219 8810
colin.mayes@aonhewitt.com                 adam.leviton@capitalmsl.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 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.


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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 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.

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