Aon comments on Budget 2016 (16 March 2016)
Aon appointed as advisers to the National LGPS Third Party Administration Framework (14 March 2016)
Aon reappointed as actuarial adviser to the Durham Country Council scheme (9 March 2016)
LONDON, March 16, 2016 – Aon plc (NYSE:AON), has commented on today’s UK Budget Speech On the Lifetime ISA.
Lynda Whitney, partner at Aon Hewitt, said: “The Chancellor’s announcements on pension issues look like unfinished business. A number of the key issues raised in the pensions tax consultation have not been decided, but deferred. The new Lifetime ISA may be welcome, but it could well be the Trojan Horse that kills off pensions at a later stage.
“The Lifetime ISA is to be welcomed as it addresses the need to engage with young people to save for the future. However we fear the mixing of shorter term saving for house purchase, with longer term saving for pensions. Will individuals invest in low risk assets, focusing on protecting the capital value, and so ignore the need to take enough risk to generate returns for a long-term investment like pensions?”
Kevin Wesbroom, senior partner at Aon Hewitt, said:
“The reaction of employers will be fascinating, and we can identify significantly different responses. Some will want to extend their benefits package to contribute to Lifetime ISAs as part of their employment package, to appeal to their younger workforce. Leading employers might want to offer a savings allowance that could be diverted to pensions or Lifetime ISA as decided by the member. Other employers will withdraw from pensions and just contribute the Auto Enrolment minimum – they will welcome wholesale opting out of pensions to fund Lifetime ISAs instead. We hope they will not be charged with inducing their employees to opt out! “Lifetime ISAs will represent the better saving option for many low paid employees. For others the decision may be less clear cut and these members may decide they need financial education – paid by the employer, using the new increased allowance - to help them decide whether they are better off in pensions or a Lifetime ISA.”
On Public Sector pension schemes
Tim Lunn, partner Aon Hewitt: “Reducing the discount rate on public sector pensions to 2.8% above CPI will increase contributions to unfunded public sector schemes. This increase could be significant for employers participating in these schemes.
“The move to Academy schools will also have a significant impact on local government pension schemes where Local Education Authorities will see further maturing in their liability profiles as schools convert to academies. This may have a range of implications for the relevant councils in relation to funding and investment strategy.”
Debbie Falvey, DC Proposition Leader at Aon Employee Benefits, said:
“It’s good news that Chancellor has agreed to implement the Financial Advice Market Review (FAMR) recommendations on the provision and funding methods for financial advice. The raft of changes already in play, pension freedoms, LTA and AA limit changes have massively increased the demand for financial advice - and that was before today’s announcements. The Pension Advice allowance will be a useful way to remove one to the key barriers to seeking advice - people don’t want to write the cheque. Simplifying the rules on advice and regulatory uncertainty will be important in encouraging the development of advice services whether that is robo-advice or more traditional offers.”
On Salary Sacrifice
Jeff Fox, principal consultant, Aon Employee Benefits said:
“The update in the Budget has not moved on since the Autumn Statement. We already know that the Government is looking at salary sacrifice and they have it on their radar. However, they are specifically intending salary sacrifice to continue for pensions, childcare and bikes to work, some of the most popular arrangements. So at this time it is business as usual on salary sacrifice.”
LONDON, March 14, 2016 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has been appointed after a rigorous tender process to provide consultancy services to Lot 1 of the National Local Government Pension Scheme (LGPS) Third Party Administration Framework. This will involve Aon helping to design the tender, evaluate responses and assist with the selection of providers to be put on the Framework for third party administration services for the LGPS and potentially other public sector schemes.
National LGPS Frameworks, which is hosted by Norfolk County Council, was first established in 2012. It provides a cost effective manner for LGPS administering authorities and other public sector organisations to procure services. It commenced with actuarial and a benefits consultancy service, added investment consultancy services a year later, and has since added frameworks for custodian and legal services.
The new framework being established will have two ’lots’; Lot 1 will be for third party administration services and Lot 2 will be for Support Services.
Karen McWilliam, head of Public Sector Benefits consultancy at Aon Hewitt, said:
“The National LGPS Framework is playing an increasingly important role in the way that public sector pension services are delivered. The approach it is taking is assuring quality and a uniform method and this should be to the benefit of all involved.
“Winning the opportunity to work with the Framework on the third party administration services represents another great success for Aon Hewitt’s Public Sector Benefits and Governance team. This follows our recent reappointment as actuarial adviser to the Durham County Council Pension Fund and further helps to strengthen our contribution to the LGPS market.”
A concept viability day to discuss the proposed tender arrangements is being hosted by the Framework for interested third party administration suppliers on 18 March in London. Interested parties can register for the event at: https://in-tendhost.co.uk/norfolkcc
LONDON, March 9, 2016 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has been reappointed as the actuarial and benefits adviser to the Durham County Council Pension Fund which is part of the Local Government Pension Scheme (LGPS).
The Durham County Council Pension Fund has assets of over £2 billion, approximately 18,000 active members, 13,000 deferred pensioners and 17,000 pensioners and approximately 110 contributing organisations. Aon Hewitt will be assisting Durham County Council, as Administering Authority, in managing the fund and, in particular, in carrying out the actuarial valuations at 31 March 2016 and 31 March 2019.
Don McLure, Corporate Director Resources at Durham County Council said:
“We look forward to continuing to work closely with Aon as actuary to the Durham County Council Pension Fund in the future, during what are likely to be challenging times for LGPS Funds.”
Alison Murray, head of public sector actuarial at Aon Hewitt said:
“Aon Hewitt has worked with Durham County Council since 2003, so the opportunity to extend our working relationship over what is expected to be a period of substantial change in the LGPS is particularly pleasing. “This reappointment - which follows our appointment by the North Yorkshire Pension Fund and our reappointment by the Tyne & Wear Pension Fund, last year - continues our success in the North-East of England where we advise five LGPS Funds (Northumberland, North Yorkshire, Teesside, Durham and Tyne & Wear).”