LONDON, 10 September 2012 – Aon Hewitt, the human resource solutions business of Aon plc (NYSE:AON), has today released findings from the 2012 Aon Hewitt Delegated Investment Survey which show the significant steps being taken by trustees to address a lack of investment expertise and to improve their governance and speed of decision-making. However, the results also show how two tiers of defined benefit (DB) schemes may be developing, with many remaining limited in their ability to respond to fast-moving markets.

Almost three-quarters of respondents to the survey said that no more than one in four trustees are investment experts - which is unchanged from the findings of the 2011 survey. Two-thirds of respondents said trustee boards spend five hours or even fewer each quarter on investment and those surveyed among small schemes indicated that they were spending less time on investment matters than respondents from large schemes. 

Sion Cole, partner at Aon Hewitt, said:

“Trustees’ knowledge and understanding of investment matters has developed since the launch of this survey in 2010. However, it is clear from our findings that the majority of trustees are acutely aware of their limitations when it comes to making investment decisions, particularly as a result of the current challenging economic climate.

“We are seeing the increasing use of investment committees, independent trustees and delegated investment. However, there is a danger that trustee boards which do not address these issues will be missing crucial opportunities. Trustees, particularly of smaller, resource-constrained pension schemes, need to review their approach continually to ensure that their scheme is in the best possible position.” 

The survey reveals that one of the key changes made by trustees is the increasing adoption of a delegated approach to investment. The findings show that 27% of UK pension schemes have now delegated implementation of investment decisions to a third party. This is an increase from 17% in 2011. The results suggest that  delegated investment is set to grow rather than being a temporary trend, with an additional 10% of those surveyed saying that they intend to appoint a fiduciary manager or delegate investment issues.

Sion Cole continued:

“The increase in delegation from last year’s survey is encouraging and is contributing to the growing popularity of flight plans. Half of UK schemes now have a systematic plan for changing risk levels in light of changing market conditions and a further third are planning to explore flight plans, which is a substantial increase from last year. Moreover, for flight plans to add the most value, there needs to be regular monitoring of risk and increased agility in execution. Delegating investment decisions provides this and allows trustees to focus their time more effectively.”

On the downside, the survey showed that diversification in asset allocation remains static. Almost half the schemes surveyed are still focused on traditional asset classes, investing in three or fewer asset classes - these being equities, fixed income and real estate. Large schemes are much more diversified than small ones, with four-fifths of schemes with £1 billion or more assets invested in at least four asset classes.

The survey of 329 pension trustees, pension managers, chairs of investment sub-committees and others - covering an estimated £150 billion of UK DB pension assets - was conducted in June 2012. Delegated investment involves trustees assigning day-to-day investment decisions and implementation to a delegated provider. This is usually a consultant or fund manager, which operates within clear parameters, set by the trustees, and aims to meet trustees’ long-term investment objectives.

 Media Contact: 

Adam Leviton 
 Capital MSL
 020 7307 5339
 adam.leviton@capitalmsl.com

Notes to Editors
Copies of the 2012 Aon Hewitt Delegated Investment Survey are available from www.aonhewitt.com/

About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions.  The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance.  Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.  With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees.  For more information on Aon Hewitt, please visit www.aonhewitt.com.

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 61,000 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, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.
.