Diodes Zetex Pension Scheme chooses Aon for fiuciary management solution (24 May 2016)
Aon says companies need to review death in service provision (17 May 2016)
Aon says new DC guides answer some question but raise others (13 May 2016)
Employers Falling Short in Recognizing Millennial Workers (3 May 2016)
LONDON, May 24, 2016 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has been appointed to provide delegated investment services to the Diodes Zetex Pension Scheme.
Aon Hewitt will provide full fiduciary management services to the technology hardware company’s £75 million defined benefit pension scheme. Paul Wilson of HR Trustees and chair of the trustees of the Diodes Zetex Pension Scheme said: “Having undertaken a thorough due diligence and selection process, we felt that Aon Hewitt would be the best fiduciary provider for our scheme. The solution they offer addresses all our needs—demonstrating they had really listened to us—and that is reflected in the portfolio. It also improves our governance framework whilst giving us better control of the scheme’s key risks, all in a cost-efficient manner, which were the main reasons we chose Aon Hewitt.” Sion Cole, partner and head of European Distribution at Aon Hewitt, said: “We worked closely with Paul Wilson and the other trustees from the outset to build a strong relationship and to gain a real understanding of their unique needs. We believe that tailoring fiduciary solutions to reflect the exact needs of our clients is vital to long term success.
“We are very pleased to have been appointed as fiduciary provider by the Diodes Zetex Pension Scheme and look forward to helping them achieve their objectives. Aon Hewitt’s fiduciary business continues to grow strongly in the UK. We believe this latest win, alongside our recent fiduciary manager industry award wins, reaffirms our position as a leading provider of fiduciary management services in the UK.”
Survey shows range of options taken
LONDON, May 17, 2016 – Aon plc (NYSE:AON), has said that the latest changes to the Lifetime Allowance (LTA) and the availability of another round of pension protection should be the cue for employers to address the impact on death in service benefits. An Aon survey of 1,162 clients showed that, to date, just under half of employers with 100 or more employees have made an active assessment of the death in service implications of this latest legislation. The growth in DC pension pots, the higher level of lump sum assurance cover on offer and the latest reductions to both the LTA and the Annual Allowance have meant that concerns around this issue are no longer just for very high earners. These latest changes should in theory have been the prompt for employers to address the issue, or at least to re-visit their past decisions—some of which may date back to A-Day in 2006.
The potential problems from not dealing with the issue—or dealing with it incorrectly—are considerable:
- Employees who have taken Pension Protection can lose their protected status
- New hires lose their protected status on joining an organisation
- High earning employees (and their nominated beneficiaries) having some or all of a lump sum life assurance benefit pay out taxed at a rate of 55%
Schemes being incorrectly documented with insurers, leading to delays in claim pay-outs or even uninsured liabilities. Mark Witte, Principal at Aon Employee Benefits, said: “There has been no shortage of pension regulation for employers to get their heads around in recent years and it may be understandable if the life assurance issues have yet to reach the top of the agenda. However, we firmly believe that the time has now come for them to review the situation as more of their employees may now fall foul of the latest changes if actions are not taken. “Our survey made two things clear in particular; most companies—irrespective of size—have not taken action, and where they have, there is significant divergence in the approaches they have adopted. Among large employers, 46% are using Excepted Life Assurance policies as part of their benefits strategy, although there were considerable differences in how this approach was executed.”
Key findings of the survey include:
- In all organisations surveyed, less than 25% of respondents had taken steps to address these issues, with inaction being especially high among smaller (sub-100 lives) employers.
- The number of employers taking action is higher for the larger organisations – but still only 46%
- When action is taken, employees with Pension Protection are identified as one group to move into the excepted arena more than 50% of the time. But a greater number rely on fixed level of life assurance cover to act as a threshold, either in conjunction with this or as an outright alternative
- Where a threshold based on a level of insurance cover is in place, over a third of the time this refers to a figure of £500,000, half the new LTA.
- The next most common selection criteria for excepted benefits are those based on grade of employee, usually singling out executives or board directors.
- Fully excepted cover has been taken up by less than 4% of all employers responding to the survey, and when adopted, this has more commonly been with the smaller employers, suggesting continuing caution towards this approach.
Mark Witte said: “There remains no definitive, default—and correct—course of action for employers to take on this issue. But given the implications of inaction, this is an issue that cannot continue to be buried by the seemingly dominant pension agenda. In the absence of categoric guidance from HMRC, it is essential that employers fully consider the issues and the insurance options available, before agreeing on an approach that fits in with their over-arching reward principles”
LONDON, May 13, 2016 – Aon plc (NYSE:AON), has responded to the Pensions Regulator’s consultation on the guides to support Code of Practice 13 (the DC code), saying that while they are helpful they also raise implications for, among other issues, the costs of compliance.
Madalena Cain, principal consultant at Aon Hewitt, said: “We are pleased in principle with the aim and intentions of the ‘How to’ guides and particularly with the reduced length of the Code itself. We support the Regulator’s aim of improving the governance of DC schemes but we believe it may have increased the compliance costs of doing so with these publications. Costs will further increase if, as indicated, the How to Guides are reviewed on a more frequent basis.
“We also have some concerns about how the Regulator is stretching what is legally required by the use of the phrase ‘The Regulator expects’—which litters the Code. This is exacerbated by the ‘How to’ guides which do not distinguish between what trustees must do for legal compliance, what they could do as part of reasonable proportionate practice—and what is the gold standard best practice. We believe this approach may lead to ‘perfect being the enemy of good’.”
Madalena Cain continued: “There may also be issues for DB trustees who only have AVCs, as the ‘How to’ guides do not currently support them. This group of trustees may be left wondering if they have to do everything as if their AVCs are a DC scheme or if they can interpret this guidance proportionately and do a lot less."
LINCOLNSHIRE, Ill. and SALT LAKE CITY, May 3, 2016 — A new study from Aon Hewitt and O.C. Tanner reveals many employers are missing the mark when it comes to recognising and rewarding millennial employees.
Aon Hewitt and O.C. Tanner studied more than 470 employers across five countries to examine the strategy, vehicles and effectiveness of their recognition programs. According to the findings, one in four organizations find their current recognition programs are ineffective for millennial workers—the youngest generation in the workforce. A separate Aon Hewitt report shows millennial workers agree that their employer’s recognition programs are unsatisfying. Nearly two in five millennials (38 percent) would like to see the recognition programme at their current employer improved.
“With millennials becoming the largest generation in today’s workforce, employers need to ensure their recognition programs meet their needs,” said Gary Beckstrand, vice president at O.C. Tanner. “Millennials want recognition like any other employee, but appreciate recognition that carries meaning and helps them feel empowered. This perhaps explains why things like thank yous from peers and managers (53 percent) and public recognition from senior leadership (42 percent) were the top used vehicles across organizations at the broad level.”
When analysing what organisations with strong recognition programs were doing differently than those organisations that reported less effective programs for millennials, AH and O.C. Tanner found that organisations with effective programmes for millennials include three key rewards vehicles:
1. Handwritten notes
2. Experiential rewards (e.g., event tickets)
3. Thank you from peers, managers, or next-level manager or senior executives
“Millennials have a greater need to be recognised and want to be in front of management much sooner than previous generations,” explained Neil Shastri, leader of Global Insights & Innovation at Aon Hewitt. “Being recognised and thanked by leaders in a meaningful way and on a frequent basis not only gives millennial workers a rewarding experience, but also strengthens their personal connection to the organisation and encourages them to continue to be key contributors.”