Aon calls the odds on the 2016 Pensions Tax consultation (23 February 2016)
Entering the era of the 'New Normal' in salary increases in India (16 February 2016)
Aon Hewitt Joins the Cambia Grove as Exclusive Benefits Consulting Partner and Anchor Partner (9 February 2016)
Aon Hewitt Acquires Leading Provider of Employee Measurement Solutions (8 February 2016)
LONDON, 23 February 2016 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that, with this year’s Budget Speech coinciding with horse-racing’s Cheltenham Festival, the runners and riders are also lining up for the Pensions Stakes – otherwise known as the Chancellor’s Pension Tax consultation. Announced in last summer’s Budget, the option that has made it first past the post should be clearer after 16 March.
With a number of possible options being openly discussed, ’Honest Kev’ Wesbroom, senior partner at Aon Hewitt, has looked at all the starters in the Pensions Stakes and has come up with the likely odds – for both favourites and fallers:
Flat Rate – starting odds 2-1
“This was always our favoured runner. There are plenty of variations available under this system and Aon’s preferred approach was to move away from talking about tax relief to giving pension incentives. So would you rather have a 33% tax relief – or a system where there is a direct financial incentive with a £1 match from the Treasury for every £2 from employee or employer contributions up to a limit?
“It seems pretty clear that higher rate tax payers will be losers under this approach, and they will be sacrificed on the altar of greater incentives for the masses - or the need to raise finances overall. Double taxation (higher tax in receipt of a pension than the flat rate relief) may be an issue – but only for a very small population. This route allows both tax raising and extra savings incentives – surely a winner for all! Payroll and pension administration systems will scream – especially when DB schemes are included – but surely we can all cope with an April 2018 implementation date?”
Johnson’s Time for TEE – starting odds 3-1
“The ISA-style tax system was an early favourite and seemed to be attracting a lot of attention from the Treasury. The obvious attraction is that pension tax relief is accelerated by a generation – or one (current) generation can gain a huge tax windfall – but to the detriment of future generations of tax payers.
“This approach may be hugely attractive to the Chancellor, but would it really achieve the stated aim of encouraging more people to save? The Aon view has been that TEE only works if significant upfront incentives are offered – which would take this perilously close to an EEE system for most tax payers - so not that attractive to the Treasury. Although it’s been getting a lot of backing in the press recently, we - along with other tipsters - feel this beast just doesn’t have the staying power to make the distance.”
Sacrifice Salary Sacrifice – starting odds 4-1
“It’s become increasingly clear that the Treasury really dislikes this horse and sees salary sacrifice as tax avoidance on a massive scale and wants to close this stable down. The trouble is, if they are not careful when they close down this loophole they will make the whole idea of pension savings massively unattractive. Many employers could just give up and move to a position of paying the auto-enrolment minimum. That would really mean this horse just ends up unseating its own rider.
“We know this runner has become a favourite in recent years, but the question has always been how to reconcile the objectives - and how to deal with defined benefit schemes in a pragmatic way? We are hearing whispers that the answer will be to apply NI contributions on pensions contributions, but to use a lower rate – say half the standard rate of NI contributions. This would show a clear advantage in pension savings over cash, but would still net the Chancellor the odd few billion. And then the method of valuing DB schemes could be much more rough and ready – surely one to appeal to the general public?”
Cash Gone – starting odds 20-1
“This is a classic and popular runner - it seems to have been in the Budget stakes for ever or at least since one of its trainers called it “the anomalous but much loved tax free cash lump sum.” Nobody can quite remember why it exists – but it is massively popular with the punters and it would be a brave man to bet against it. It is likely to be placed and be ready to run again - unless it gets taken down by another faller such as Johnson’s Time for TEE.”
Shrinking Allowances – starting odds 60-1
“This has been a four times winner in the last six years, and so cannot be discounted. Will the Chancellor just continue to reduce the Annual Allowance and Life Time Allowance? Remember, at one stage they were £265,000 per annum and £1.85 million respectively. Can it be that they are down to just £40K pa and £1m before this race?
“As a runner, this is probably past its prime – even Red Rum only won the National three times – and any further tweaks to the annual or lifetime allowance will leave confusion, administration and annoyance in their wake.”
No Change Charlie – starting odds 80-1
“This outsider was heavily backed by the CBI, but the reality is that the Chancellor is likely to need to get some more tax from pensions to make the overall Budget sums add up. It’s hard to say you have increased the incentive to save if you do nothing. So I see this as an early faller during the race.”
Scrappy Chappy – starting odds 100-1
“It would have been wonderful if the Chancellor had listened to the pensions public and decided that his proposed system for a phased Annual Allowance for 2016/17 was so unworkable that he should withdraw this runner. General opinion from those in the know is that this horse is not suited to this race. Despite that, it is still on the race card. We can only hope that fails to come under starter’s orders – its removal would be a nice fillip to the pensions industry, and might be used to sweeten an otherwise nasty pill to swallow?”
Kevin Wesbroom concludes:
“Rebadging tax relief as incentives seems the obvious winner – and a chance to slip in a few billions of tax savings. It also offers a chance to throw in a few positives, for example, opportunities for younger savers to access pension benefits and older savers to put aside funds to provide for older life. But there are also a few negatives such as restricting tax free cash to a monetary amount (who remembers £150,000?) to give a truly winning combination.
“A horse like this could end up with just three legs – and still win the Pensions Stakes!”
Aon Hewitt’s annual Salary Increase Survey highlights five-year status quo in general compensation trends reflecting higher focus on merit increases
NEW DELHI (Feb. 16 2016) – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), today announced the 20th edition of its annual Salary Increase Survey in India. The study, the largest of its kind in India, analysed data across 700 companies. The results reflect a pragmatic approach adopted by corporate India towards pay increases. Anandorup Ghose, Partner at Aon Hewitt India, commented: “With this year’s numbers we are seeing a confirmation of our view that Indian companies are taking very clear steps to arrest the steady increase in compensation budgets. The lower inflation rates in the economy has also helped companies in deciding on the reduced salary increases without creating too much of a disruption in the lives of employees.”
Companies across industries are continuing to take a cautious stance and are not going for aggressive pay increases. In many cases the industries have taken a marginal dip in their overall budgets as compared to 2015 actual spends. Sectors such as Life Sciences, Media, and Consumer Products are projecting a higher increase than the market average. These industries have also consistently led the salary increase numbers since 2012. The ‘Early stage companies/Start Ups’ stand out despite being in the pre-profit stage for over three years and continue to have an aggressive stand on pay. At 15.6% salary increase projected for 2016, they feature as number one, with the closest second being Life Sciences at 11.6%.
||Proj Salary Increase (2016)
||Proj Salary Increase (2016)
||E-commerce / Early Stage
||Media - Electronic/Print
||Hospitality & QSR
||Hi Tech/Information Technology
||RE & Infrastructure
||Transportation/ Logistics/ Shipping Services
Increasing Focus on Talent and Merit
Over the last few years, while employee expectations have gone up, Aon Hewitt’s data shows that companies are managing these higher expectations carefully and are not getting swayed by it. The focus on performance differentiation is far higher with a larger proportion of budgets being allocated to higher performers.
Investing in key talent emerged as a major trend. Key talent would mean high potential and hot skills apart from high performers. The payout gap between an average performer and key skills is growing year on year. At 63%, this is the highest differentiation India Inc. has observed.
Additionally, in the last five years, the percentage of employees with top performance rating has dropped by close to 30%, implying that organisations are not hesitating to differentiate sharply on the basis of performance and are allocating the share of the total increase budget accordingly. India places 8.2% of its overall population at top rated. This number has significantly dropped in the last five years.
Anandorup Ghose commented: “At an average pay increase budget of 10.3% across India, HR managers will be pushed to ensure they are being more innovative and thoughtful in how they reward their top performers while ensuring they are able to retain and motivate the rest of the organization as well.”
Attrition rate at its lowest for five years
The attrition rate in India is dropping. At 16.3%, it is the lowest that corporate India has observed since the 2009 financial crisis. While attrition was controlled at a broader level, key talent attrition increased from 5.9% in 2014 to 7.3% in 2015. Increasingly organisations are developing separate retention plans and policies for their top talent. While Rewards continues as a retention tool to ring fence top talent, programs around leadership opportunities and coaching, overseas assignments, fast track programs for high-potentials are fast gaining prominence.
LINCOLNSHIRE, IL and SEATTLE, WA February 9, 2016 - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, and the Cambia Grove announced today that Aon Hewitt has become an Anchor Partner of the Cambia Grove, the only benefits consulting firm with this distinction. The Cambia Grove is a hub for health care innovation and a collaborative space for the health care community to incubate, cultivate and catalyse ground-breaking ideas in the new health care economy.
As an anchor partner, Aon Hewitt will facilitate collaborative discussions with clients to explore pilot programs with entrepreneurs, innovators, businesses and investors who are collectively seeking to solve some of the health care industry’s most pressing challenges. Aon Hewitt consults with more than 3,000 health clients and administers health benefits for more than 10 million Americans.
“Transformational change is needed to influence the trajectory of health care and improve the way it is delivered in the US,” said Craig Dolezal, national Health and Benefits leader, Aon Hewitt. “As someone who calls Seattle home, I am excited to be a part of this new endeavour. Our partnership with the Cambia Grove enables Aon Hewitt—and our clients—to closely collaborate with organizations that are at the forefront of exploring new approaches for mitigating costs, reducing risk and improving consumer health and wellness.”
“We are thrilled to have Aon Hewitt join the Cambia Grove as our newest anchor partner and exclusive benefits consulting partner,” said Nicole Bell, executive director of Cambia Grove. “As an industry leader and influencer in health benefits consulting we look forward to working together to help connect their clients with some of our region’s most innovative entrepreneurs and start-ups.”
Acquisition of Modern Survey Enhances Aon Hewitt's Global Employee Survey and Talent Analytics Capabilities
LINCOLNSHIRE, Ill., February 8, 2016 /PRNewswire/ -- Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, today announced it has acquired Modern Survey, an employee survey and talent analytics solutions provider that enables companies to more effectively understand their workforce and drive business performance by creating an aggregated, holistic view of the employee lifecycle— from the candidate experience, new employee onboarding to engagement and exit interviews.
Aon Hewitt is a global leader in talent and employee engagement, managing more than 9 million records in employee engagement across more than 4,500 organizations in 164 countries. This transaction strengthens Aon Hewitt's suite of workforce analytics solutions, including business and human capital analytics, employee engagement, onboarding and exit surveys and 360-degree feedback. It will enhance Aon Hewitt's technology, reporting and dashboards that support managers' ability to make decisions and take action.
"It is increasingly crucial for our clients to attract and retain top talent, but their strategies in this space are often limited to stand-alone one-time snapshots of what engages their workforce," said Michael Burke, CEO of Talent, Rewards & Performance at Aon Hewitt. "Acquiring Modern Survey will help our clients move to continuous employee measurement, aggregated into an intuitive, user-friendly interface, providing fact-based insights to more effectively drive business and employee engagement and performance. This acquisition is the next step in our strategy to partner with our clients to drive business performance through people."
Modern Survey's team of more than 40 Minneapolis-based professionals will join Aon Hewitt's current team of nearly 3,000 Talent-aligned professionals, including 350 colleagues in Aon Hewitt's global Engagement practice. The three Modern Survey founders, Patrick Riley, Dan Riley and Don MacPherson, will assume leadership roles in Aon Hewitt's Talent, Rewards & Performance Practice.
"As the war for talent heats up, companies have to take a more integrated and global approach to measuring human capital across the employee lifecycle that goes beyond just an annual employee engagement survey," said Patrick Riley, CEO and co-founder of Modern Survey. "The combination of Aon Hewitt and Modern Survey—with its strong research capability, fast and nimble technology, depth and breadth of human capital solutions and global scale—is unmatched in the marketplace."
Financial terms of the transaction were not disclosed.