LONDON 6 October 2014 - Aon plc (NYSE:AON), the leading global provider of risk management and human resource consulting and outsourcing, has commented on the publication by The Pension Protection Fund (PPF) of its Triennium Policy Statement and 2015/16 Consultation document, which describes its approach to levies.

Milan Makhecha, Head of Aon Hewitt’s PPF Levy Consulting Group said
“The overall reduction of levies by nearly 10% provides welcome relief to our clients who are looking to manage the costs of their defined benefit pension plans. There is clearly a lot of detail in the PPF’s announcement and the outcome for each specific scheme will vary. For example, it is not the case that everyone will see the near 10% reduction – but, on balance, this is news which most schemes will welcome.

The PPF has also carefully considered a number of detailed scenarios including a range of alternative financing solutions.

Lynda Whitney, partner at Aon Hewitt said:
“The recognition by the PPF of the potential value of surety bonds to provide security for pension schemes is an exciting development.  We are pleased that the PPF has promptly recognised this innovative solution following the transaction Aon arranged for a FTSE100 client in June.

“In doing this, the PPF has indicated that it sees surety bonds as providing comparable security to a bank letter of credit, and that with similar terms a surety bond can be recognised as a Type C(ii) contingent asset which can be used to manage a scheme’s PPF levy.”

Lynda Whitney continued
“Pension schemes are interested in surety bonds because they can bridge the gap when the company and trustees disagree. A surety bond allows trustees to be more flexible about the cash they need because they have the additional security that if the worst happens to their sponsor, the surety bond will pay out.

“We are seeing particular interest in them because they do not interfere with other banking arrangements. We are also seeing significant interest from the insurers who are keen to write surety bonds for pension schemes – so there should not be capacity issues in the market. We believe that this PPF levy recognition opens the way for more schemes to consider surety bonds as part of their drive towards pensions stability.”

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
 

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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 66,000 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, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.