LONDON, 9 April 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that a poll of attendees to its post-Budget teleconference indicated that the vast majority of pension schemes are expecting to offer more choices to their members in order to embrace the flexibility outlined in the Chancellor's new pension measures.

Over 200 pension managers, trustees and finance directors attended the briefing which focused on the Budget changes and their consequences for DC scheme design. In the poll of those on the call, 10 per cent said they expected to redesign their investment policy to deliver a cash payment at retirement, which the member could take away and invest or spend as they wished. A further 17 per cent said they expected to invest to generate an income in retirement - although probably not in the form of an annuity - with a favoured option of some type of income drawdown strategy or other way to provide a regular income.

However, the vast majority on the call (73%) said they expected to offer a combination of cash and income generating strategies, with the ability for members to elect according to their circumstances and preferences.

Jan Burke, partner and head of DC consulting at Aon Hewitt, said:
"Our post-Budget poll made it clear - DC schemes should be prepared to offer their members more choices if they are really going to embrace the flexibility heralded by the Budget. The current approach of many schemes - a single lifestyle investment strategy - will need to be reviewed.

'Lifestyle strategies typically end up close to retirement by investing in bonds to match the cost of buying an annuity. But from April 2015 onwards, many members will not want to buy an annuity, but will want to 'cash out' their pensions savings, either to spend them or to take advantage of the other Budget changes such as increased ISA allowances and special pensioner bonds - or even to invest in property."

Sophia Singleton, DC consultant, said:
“Schemes will need to engage with their members well before they retire in order to encourage them to think about how they intend to use their pension proceeds, and to ensure they invest appropriately in the run-up to retirement. Even if annuities have fallen out of favour, many members will still want to apply their pension pots to generate an income - rather than blowing it all on the mythical Lamborghini.

"We expect to see a significant amount of market - and scheme - innovation as employers look to support members converting their savings into a regular income during retirement. Equally, for part of their savings, we believe pension scheme members will appreciate the total flexibility the Budget changes will offer them -and it will be sensible for schemes to accommodate this. Single solutions will no longer be appropriate, so trustees and plan sponsors will have to work harder to ensure they understand the different segments of their membership - and how they can help address their needs. We are facing a brave new DC world and schemes need to think hard about how they are going to respond to it.”

Media Contact: 
Colin Mayes                                      Marina Jane Sanchez
Aon Hewitt                                         Capital MSL
01372 733689                                    020 3219 8811
colin.mayes@aonhewitt.com               marina.jane-sanchez@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 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.

Sign up for News Alerts: http://aon.mediaroom.com/
Follow us on Twitter: @aonhewittuk

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurancebrokerage, and human resources solutions and outsourcingservices. Through its more than 66,000 colleagues worldwide, Aonunites to empower results for clients in over 120 countries via innovativeand effective riskand peoplesolutions 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.comfor more information on Aon and www.aon.com/manchesterunitedto learn about Aon’s global partnership and shirt sponsorship with Manchester United.