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Aon Hewitt urges the Government to extend pension freedoms to DB schemes
NYSE:AON

LONDON (18 June 2015) - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has urged the UK Government to extend pension freedoms to pensioner members of defined benefit (DB) schemes.

Defined contribution (DC) pension scheme members now have the flexibility to choose how best to spend their retirement savings – not just to purchase an annuity, but to take all of their savings as a taxable lump sum or to draw an income from their savings as and when required.

HM Treasury and the Department for Work and Pensions are currently consulting on whether similar freedoms should be offered to those DC members who had previously purchased an annuity (effectively creating a secondary annuity market). The consultation closes today.

In its response to the consultation, Aon Hewitt calls for extending the concept of pension freedom to pensioner members of DB schemes and responds to the concerns regarding advice and cost.

Kevin Wesbroom, senior partner at Aon Hewitt, said:
“The Chancellor announced this week that 60,000 people have already taken advantage of the pension flexibilities and transferred out over £1 billion of their DC pension schemes. As a minimum, DB schemes should be able to allow pensioners the flexibility to surrender future pension increases, including statutory minimum increases, for a cash lump sum, a transfer value or a higher pension within the scheme without future increases. While DB schemes should not be forced to offer these options to members, legislation should enable such flexibility.”

In its response to the consultation, Aon Hewitt also welcomed the intention to widen the range of options for part of the retired population through the creation of a secondary annuity market. However, it warns that this is likely to involve complex issues and considerable costs. Aon Hewitt warned it is necessary that appropriate consumer safeguards regarding the requirement to seek advice are put in place.


Kevin Wesbroom, said:
"There are complex issues involved and professional advice is likely to be required, particularly where significant funds are concerned. The costs of underwriting are also likely to be significant. Therefore, assignment may make most sense for those with significant annuities – since the costs involved may otherwise be disproportionate.

“Assignment to a third party creates challenges for administration and monitoring of the policyholder. The possibility of allowing the original insurer to buy back the annuity would effectively provide pensioners with an option to surrender the annuity policy – a significantly simpler solution.”

ENDS

About Aon

Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and
reinsurance brokerage, and human resources solutions and outsourcing services. Through its more
than 69,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via
innovative risk and people solutions. For further information on our capabilities and to learn how we
empower results for clients, please visit: http://aon.mediaroom.com/


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Media Contact
For further information please contact:
Anelia Fikiina
CNC
020 3219 8887        
anelia.fikiina@cnc-communications.com

 

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