LONDON, 25 August 2008 - The number of final salary schemes open to new members has dropped from a quarter last year to a record low, with barely a sixth (17 per cent) still open to new members, according to new research released today by Aon Consulting, a leading pension, benefits and HR consulting firm.  Yet because of their near extinction, final salary schemes have become a prized asset in the fight to retain employees.

Aon's 2008 Employer Survey found that a combination of factors have created tough conditions for companies to continue with defined benefit (DB) pension schemes. These include tighter regulation of pension schemes, volatile market conditions, strengthening of longevity assumptions and fears over future developments in accounting for pensions. There is clear evidence of an increasingly restrictive environment for DB schemes: in the corresponding Survey last year, approximately a quarter (28 per cent) were still open to new members, down from half in 2003.

The 2008 Employer Survey found that over three quarters (81 per cent) are continuing to allow further pension accrual. Employers said the chief reason for doing this was competitive pressure related to employee retention, which has overtaken board resistance as the number one reason to maintain further DB accrual.

A third of employers (32 per cent) continuing to offer DB schemes to new entrants said that closure was 'too painful' to contemplate. This was significantly more than last year's figure of 17 per cent, and this is partly explained by several high profile closures to future accrual during the course of last year.

Commenting on the findings, June Grant, principal, at Aon Consulting, said: "With the number of final salary schemes plunging to a record low, they have now become gold dust for the employees who still have them. Employers can turn this to their advantage because the schemes give them a competitive edge in the fight to attract and retain talent.

"While regulation, improved life expectancy and market volatility have all served to increase pressures on employers sponsoring DB pension schemes, good scheme design can play a vital role in mitigating their effects.

"Financial innovation over recent years has helped scheme sponsors to reduce volatility, but the only way to reduce the real level of cost is by reducing the benefits offered. Options to achieve this include increasing the scheme's normal retirement age, reducing the rate of benefit accrual and increasing members' contributions.

"Apart from adapting to legislative change, the fundamental design of most DB schemes has changed little over the decades since they were first introduced. Most scheme sponsors would benefit from reviewing their scheme design from a more radical perspective, and one that both supports corporate strategy and addresses employee resistance to change."

For more information contact:
Susie Patterson / Josephine Corbett
0207 269 7233 / 250
susie.patterson@fd.com / Josephine.corbett@fd.com

David Skapinker
020 7505 7478
david.skapinker@aon.co.uk

About the survey
Aon Consulting questioned over 100 managers of defined benefit pension scheme provision in the UK.  Respondents included finance directors (26 per cent), pension scheme managers (42 per cent) and HR managers (16 per cent), as well as other senior executives such as chief executive officers and company secretaries. By size, over a quarter of schemes have assets in excess of £500m (26 per cent); another quarter (27 per cent) have assets worth between £100m and £500m; a quarter (27 per cent) are in the £25m - £100m range, with the remainder (20 per cent) having up to £25m of assets.

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. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

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