NYSE:AON
Apr 14, 2014

LONDON, 14 April 2014 - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that while two-thirds of the pensions professionals who participated in its Budget teleconference indicated that they were supportive of extending flexibility to defined benefit (DB) scheme members, they also had concerns over the potential for members to take poor decisions given the increased flexibility on offer.

The teleconference on the new flexibilities offered to members of defined contribution (DC) schemes from April 2015 was attended by over 200 pension managers, trustees and finance directors. Attendees were polled on the issues surrounding one of the unknown areas from the Budget  - whether a member of a private sector DB scheme will be allowed to transfer out into a DC arrangement,

When asked about these transfers, just 10% of the pensions professionals thought transfers should be banned. However, only 20% thought transfers should be available without any restrictions. The majority - 70% of those polled - thought that transfers should be permitted, but with some restrictions imposed.  This could possibly be similar to, or an extension of, the Code of Good Practice which covers existing incentive exercises. Under this, sponsors are required to provide access to independent financial advice for individuals, in order that they can receive a recommendation on whether it is in their best interests to transfer.

Ben Roe, head of the liability management practice at Aon Hewitt, said:
"This looks to be a very sensible balanced position that delegates have proposed. There is no reason to deny DB members the Budget flexibilities that DC members will enjoy, but we do need to recognise the special nature of a DB promise. Allowing members to transfer - but possibly only after they have taken advice - seems a fair compromise between banning transfers and unrestricted transfers. It would also help to reassure the Treasury that there will not be a flood of exits from DB schemes, which might potentially de-stabilise the investment markets in government and corporate bonds.

"We could well see a very short term flurry of activity, as some DB members are concerned that their existing ability to transfer will be curtailed or stopped altogether at the end of the consultation period on 11 June. We cannot rule out immediate anti-forestalling measures by the Treasury and we have already experienced a number of DB members wanting to ensure they can access the full Budget flexibility in the future by transferring sooner rather than later. This puts severe pressure on all those involved - members, trustees and the independent financial advisers who provide advice on the transfer. Anybody wishing to consider such a transfer needs to move fast."

Ben Roe continued:
"These changes could make life difficult for trustees who have some tough decisions in front of them. Should they communicate the changes to their members - and face concerns they are encouraging them to transfer in the short term? Or should they keep quiet and risk recriminations from members if they are subsequently unable to transfer?

"We suggest that a balanced communication on the changes and the potential for the ban on transfers is the right way forward."

Media Contact:
Colin Mayes                                            Marina Jane Sanchez
Aon Hewitt                                              Capital MSL
 01372 733689                                         020 3219 8811
colin.mayes@aonhewitt.commarina.jane-sanchez@capitalmsl.com

Notes to editors
About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com.


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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurancebrokerage, and human resources solutions and outsourcingservices. Through its more than 66,000 colleagues worldwide, Aonunites to empower results for clients in over 120 countries via innovativeand effective riskand peoplesolutions 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.comfor more information on Aon and www.aon.com/manchesterunitedto learn about Aon's global partnership and shirt sponsorship with Manchester United.

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