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Pension Protection Fund needs greater clarity say manufacturers


London – 13 July 2004– Government policy on the proposed Pension Protection Fund (PPF) is currently poorly expressed and needs greater clarity if it is to have any chance of greater employer support according to the latest EEF¹/Aon Consulting² survey. 

This call was made following publication of results from this EEF/Aon Consulting Pensions Survey, which analysed the views on the PPF of almost 50 of the UK’s largest manufacturing companies with occupational pension schemes. Despite a high level of support in principle for the idea of the PPF, the Survey showed that, as it is currently designed, there is still considerable confusion and uncertainty amongst employers about how the PPF will operate and the costs that they will incur. Until these are resolved, it is clear that it will be very difficult for employers to give greater support to the PPF.

Key findings from this Survey were:

  • Two thirds of the companies supported, in principle, the idea of the PPF
  • Three quarters of them felt that employers should be able to recover all or part of the PPF levy from pension scheme members
  • Nearly 85% of the companies who responded felt that the introduction of the PPF would have a negative or no impact on their decision to provide a defined benefit occupational pension scheme in the future.

Commenting on the Survey’s findings, EEF Deputy Director of Employment Policy, David Yeandle said: “Employers clearly need more information about the way in which the PPF will operate in order to make a proper assessment of its practical implications for their business and time is rapidly running out if this is to be done before the PPF’s planned implementation in April 2005. These results also reinforce EEF’s view that there is very little in the Pensions Bill encouraging employers to introduce new, or enhance existing, occupational pension arrangements.”

Donald Duval, Head of Professional Practice at Aon Consulting added: “It is a terrible thing to lose your pension saving because your company has gone broke, and something needs to be done about it. But fortunately it is a relatively rare event.”

“The majority of the UK public will receive their pension savings on retirement. Yet for all too many this will still not prove enough to provide a decent pension – because not enough is being saved.”

“The Government must not lose sight of this bigger issue – the savings shortfall. It is vital that it continues to promote a better understanding of saving for retirement and encourage greater pension provision now more than ever before.”

About this survey:

This is the latest in a series of EEF/Aon Consulting Pensions Surveys that has been undertaken since 1998 on the views of EEF members on various pensions issues.   The research was carried out in June 2004. A further Survey will be undertaken later this year which will examine the views of EEF members on a number of key pensions issues including employer/employee compulsion and retirement age.                                    

Note to Editors:

  1. EEF, The Manufacturers’ Organisation
  2. Aon Consulting is a leading pensions, benefits & human resources consultancy firms.

About EEF

EEF, the manufacturers' organisation, has a membership of 6,000 manufacturing, engineering and technology-based businesses and represents the interests of manufacturing at all levels of government. Comprising 11 regional Associations, the Engineering Construction Industries Association (ECIA) and UK Steel, EEF is one of the UK's leading providers of business services in employment relations and employment law, health, safety and environment, manufacturing performance, and education and skills.

About Aon Consulting

Aon Consulting is a leading human capital consultancy, helping organisations of every size to attract and keep the employees they need. We advise on all aspects of employment, including health-related insurance and risk; employee compensation and pensions; human resource strategy planning; job design and change management; and staff assessment and legal issues.

Aon Consulting is a division of Aon, the UK’s largest insurance broker and provider of risk management services, a major force in reinsurance and the UK human capital consulting market.  Aon Consulting Limited is authorised and regulated by the Financial Services Authority.

This press release may contain certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results, depending on a variety of factors. Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, pension funding, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual cost of resolution of contingent liabilities and other loss contingencies, the ultimate impact of the business transformation plan, and the timing and resolution of related insurance and reinsurance issues relating to the events of September 11, 2001.

Further information concerning Aon Consulting and its business, including factors that potentially could materially affect the Company's financial results, are contained in the Company's filings with the Securities and Exchange Commission.    

Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only


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