LONDON (23 June 2016) – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said in its submission to the Department for Work & Pensions (DWP) inquiry into the pension scheme operated by Tata Steel, that it has argued for universality and transparency of any changes in the way defined benefit (DB) schemes are to be operated.
Kevin Wesbroom, senior partner at Aon Hewitt, said:
“Tata Steel is not alone nor even an extreme example of how a DB pension plan can become a challenge to a sponsor’s business. The issue of increasing DB costs affects all sponsors of DB schemes. Any solutions should not be specific to Tata Steel but open to other schemes with distressed employers. Parliament will need to decide how it is going to ease the burden of DB provision for sponsors in distressed situations, and who will decide and how it will be decided which cases are relevant.”
“The pensions industry is talking about reducing/removing the benefits of affected members without their consent – which has hitherto been legally prohibited except in the case of employer insolvency. Any changes should therefore be carefully considered and not a knee-jerk reaction to a specific situation. If legislation is changed to permit compromising benefits, then any such change should be honestly and transparently addressed. We should avoid devices such as scheme reconstructions as mechanisms that will lead to benefit compromise.
“If it is decided that it is right to change benefits, then we should ideally do this within the original scheme, after clear communication to members showing which benefits they are losing.”
Notes to Editors
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 72,000 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.
Follow Aon Hewitt on Twitter: https://twitter.com/AonHewittUK
Sign up for News Alerts: http://aon.mediaroom.com/index.php?s=58