London, 24 November, 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), has cautioned UK pension schemes against being over-reliant on so called ‘live pricing feeds’ for bulk annuities.

The ultimate objective for many pension schemes is the use of a bulk annuity to secure benefits with an insurer. It is therefore critical to understand when the timing is right to buy. ‘Live pricing feeds’ are widely available from the insurance providers and are a good indicator of general market pricing. However, these feeds are primarily driven by financial conditions and do not necessarily reflect what an individual scheme should reasonably expect to actually pay.

Martin Bird, senior partner and head of Risk Settlement at Aon Hewitt, said:

“It is not unusual to see a 10% variance between ’live pricing’ and the real price in a transaction. This is because genuine transaction pricing reflects the assets the scheme has available to fund the premium, the assets that an individual insurer may source to support a transaction and the pricing of the scheme's own demographic profile. For larger deals, the availability of longevity reinsurance capacity is also a major contributor to the final annuity price. A full understanding of all these individual pricing components is a must when assessing the value of any deal.”

“So while we are hugely supportive of pricing feeds, it’s important that trustees and sponsors give careful thought about how and when is the optimal time to execute a transaction.  A 10% improvement in price could make all the difference in deciding whether or not to pull the trigger.”

Over the past five years, the Aon Hewitt Risk Settlement Group has advised on over £30billion of settlement transactions. The recent launch of its Implemented Annuities service helps defined benefit pension schemes to simplify and streamline the process of bulk annuity transactions by delegating key elements of the process to Aon Hewitt. The Implemented Annuities service uses Aon Hewitt's fiduciary investment management platform, Delegated Consulting Services, to enable efficient preparation of a pension scheme's assets for a bulk annuity transaction, and then the timely and cost efficient transfer of suitable assets to the chosen insurer to execute the transaction.

The launch of Implemented Annuities also followed the recent launch by Aon Hewitt and Eversheds of Pathway, the complete streamlined solution for bulk annuity purchase, including pre negotiated contract terms with insurers.

Media Contact:
Colin Mayes                                Anelia Fikiina
Aon Hewitt                                  Capital MSL
01372 733689                              020 3219 8887
colin.mayes@aonhewitt.com        anelia.fikiina@capitalmsl.com

Notes to Editors

Implemented Annuities
The key features of Aon Hewitt’s Implemented Annuities solution include:
• Bespoke annuity price tracking for each scheme
• A plan for the process, using scheme-specific trigger points
• Streamlined implementation, with the upfront provision of key advice and preparation
• Insurer due diligence – covering financial, administration and legal aspects
• Enhanced insurer engagement and co-operation (including Aviva, Legal & General, PIC, Rothesay Life; Prudential also support the platform and detailed joining discussions are ongoing)
• Access to bespoke tailored annuity contracts and associated legal advice through the use of Pathway
• Cost-efficient and smooth asset preparation and transition, including access to bespoke "annuity ready" asset funds
• Risk modelling and price monitoring by Risk Analyzer, Aon Hewitt’s online valuation, monitoring and risk analytics system
• Project management and governance/decision-making support
• Advisory fee certainty and control

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.

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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 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.