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Final salary pension schemes under pressure
Legislation, regulation and financial turmoil have created a hostile environment for the survival of DB schemes
London
NYSE: AOC


LONDON, 17 April 2008 - Many sponsoring companies of final salary pension schemes are in a state of distress, owing to years of onerous legislation, the current regulatory regime and financial turmoil, according to Aon Consulting, a leading pensions, benefits and HR consultancy firm.
Speaking at the Managing Risk: a financial director’s perspective conference at the Yorkshire branch of the Institute of Chartered Accounts of England & Wales (ICAEW) today, Marcus Hurd, Senior Consultant & Actuary, argued that sponsors of final salary pensions schemes are struggling to survive, but that successful companies will manage their obligations in the same way as they manage other underperforming arms of their businesses. 
In his speech, titled Final Salary; Managing Distress, Marcus Hurd, Senior Consultant & Actuary at Aon Consulting said: "Final salary pensions have been hit by years of onerous legislation and now tight regulation and financial turmoil. These three factors have created the current environment where sponsors of final salary pension schemes are struggling in a distressed environment.
"Many companies continue to underestimate the magnitude of their financial obligations to pension schemes.  Rather than managing the relatively minor scheme surplus or deficit that appears on company balance sheets, the pension scheme is comparable to running a subsidiary, which in terms of its total assets and liabilities is far larger than many companies' mainstream businesses.  Successful companies, however, are characterised by their ability to manage underperforming business units efficiently and effectively.
"Successful companies exposed to the final salary pensions environment will manage their final salary business unit as if it were a subsidiary.  They will give it the appropriate management time, use financial instruments to manage their risk exposures, manage their operations efficiently and seek opportunities to settle liabilities at a reasonable price."
Ends
For more information contact
Leo Wood  / Susie Patterson
0207 269 7137 / 233
leo.wood@fd.com  / susie.patterson@fd.com 
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, one of the UK’s largest insurance brokers and providers of risk management services and a major force in reinsurance and the UK human capital consulting market.  Aon Consulting Limited is authorised and regulated by the Financial Services Authority.
About Aon
Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world’s “best broker” by Euromoney magazine’s 2008 Insurance Survey. Aon also was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto www.aon.com.
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