LONDON, 04 February 2015 - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has released the findings of its Settlement Readiness Survey which shows that many UK pension schemes remain unprepared to take swift advantage of opportunities in the risk settlement market.

In the survey, conducted over the last two years, 135 schemes (ranging in size from £1 million to over
£2 billion) answered 20 questions on their state of preparation to settle pension risk.  In periods of favourable pricing for settlement transactions, schemes are likely to be jostling for the attention of resource pressured insurers and the least prepared risk missing out on opportunities.

John Baines, principal in Aon Hewitt's Risk Settlement Group said:
"This survey has shown that many schemes are still not in the state of preparedness that would give them the best chance of settling their pension risk when optimal pricing arises. Market opportunities to settle risk can arise at short notice – the current opportunities in the medically underwritten market are an example of that.  Schemes that can demonstrate they are genuinely ready will be taken most seriously by insurers - and typically secure the most attractive terms.

“Even where risk settlement is not part of the short term strategy, understanding these issues will help schemes better understand the options available to them as they seek to achieve a greater degree of control within a pension stability framework.”
 
Key findings from the survey:

- Over half of trustee groups have not considered the potential implications of a transaction on the financing of the scheme
- Legal advice has only been taken in under one-third of schemes to check there are no obstacles to overcome before they can transact
- Almost a third of schemes have pension increases that might be complex to insure, yet the vast majority of these schemes have not considered how this might impact on any settlement activity
- Almost half of schemes do not have the comprehensive data they would need to access the best possible pricing

John Baines said:
“There are also many positives coming out of the survey, in particular with trustees increasingly recognising the need to be prepared, even if they have not yet taken all the necessary steps.  Around 75% have received some form of settlement training, and over half of trustee boards monitor bulk annuity market pricing.

“Our survey has also covered schemes that have actually transacted. What this shows is that, while some preparation is essential, it’s still rare for schemes to be perfectly ‘settlement ready’ in all areas when seeking bids.

“Trustees should gain some comfort that they need not wait until they have concluded every aspect of preparation before approaching the market - but the more prepared they are, the easier it should be to move ahead.”

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

Notes to Editors

Aon Hewitt Risk Settlement solutions
Aon Hewitt has developed a suite of solutions to help schemes of all sizes through the risk settlement process:

• Developing a Feasibility report to allow schemes to assess the funding, investment and practical issues.
•  The AHEAD platform which allows schemes to collect medical data from members to allow cost efficient and timely access to the highly competitive medically underwritten bulk annuity market, with average response rates of over 80%.
• The Implemented Annuities Service which 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.
• Pathway – Aon Hewitt’s streamlined annuity broking and implementation service.

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.