Media room

Press releases—October 2015

China's Structural Shift - Rethinking Rewards (29 October 2015)
With Stable Increase in Hong Kong Wages and Low Unemployment, How Will Employers Nurture the Right Talent? (29 October 2015)
Aon Hewitt's View on Hong Kong's New Competition Ordinance (29 October 2015)
Aon Named a Winner of the 14th Annual Chicago Innovation Awards (28 October 2015)
Aon forecasts rising wave of scheme closures as low bond yields and high deficits take effect (28 October 2015)
Employers are Taking Action to Help Workers Close the Retirement Savings Gap
Technology Sector Hiring and Pay Remains Steady in Major Asia Pacific Markets (21 October 2015)
Employers are Taking Action to Help Workers Close te Retirement Savings Gap (20 October 2015)
Aon Announces Third Quarter 2015 Earnings Release and Conference Call (8 October 2015)
Sifting Through the Medicare Maze (8 October 2015)
U.S. S&P 500 Pension Plans See $102 Billion Increase in Funded Deficit in the 3rd Quarter (7 October 2015)
Business Insurance names two Aon executives as 2015 Women to Watch (7 October 2015)
Aon completes line up of DC services with launch of the Aon MasterTrust (5 October 2015)
Aon rejects ISA-style pension system (1 October 2015)


China's Structural Shift - Rethinking Rewards 

The ‘New Normal’ – Not a Surprise

Hong Kong, October 29, 2015 – Today Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), shared in its Aon Hewitt Annual Rewards Conference – 2015 Hong Kong the latest trends and outlook into Greater China talent and rewards.

*Long before President Xi Jinping made his ‘New Normal’ speech in November 2014, the Chinese government already had sent many signals that they would be taking a new route to sustainable economic growth. When President Xi introduced the world to the ‘new normal’, he was just reiterating with a final mark of authority, what the world had seen coming for more than the previous 18 months.

In the midst of the current deceleration in growth, the Chinese economy is also making a ‘structural turn’.

Organisations across industries and sectors are feeling the effects of this slowdown; some had anticipated it in the last 18 months and geared up for it.

An Opportunity to Take Stock and Refresh
Nonetheless, it is important to recognise that although the Chinese economy is slowing down, it remains dynamic and still offers abundant opportunities for companies to grow. A successful organisation transformation within the current economic context rests on the key pillars of big data-driven analytics, customer centricity, go-to-market agility, and productivity enhancement. With these forming a foundation, companies are looking to build key capabilities to outpace competition. These capabilities will span across the traditional sales & market organisation, placing special emphasis on e-commerce and sales force effectiveness. Innovation is another indispensable capability that the government, private and foreign players in China are striving hard to build.

In the ‘new normal’, companies can achieve breakout growth by synthesising strategies across sales, marketing and distribution. They can no longer rely on relationship selling or adding sales headcount to achieve revenue growth. As an example, pharmaceutical companies are looking at tweaking their sales model to focus more on service and technical expertise, rather than purely ‘feet on street’ selling. The direct sales rep headcount in Tier 1 cities fell by 4% in 2014-2015. Comparing this with 2011--2012 when the headcount increased by 16%, we know that there is a ‘new normal’ being played out here. Similarly, there is an emphasis on increasing engineering headcount and in industries like Auto Vehicle and Machinery. With a long term focus on building innovation capability; these industries have started reconfiguring their workforce.

Overall salary increase budgets in China have been on the decline for the past several years and at 7.6% in 2015 are at their lowest levels since the Global Financial Crisis. A bigger worry for business heads and CHROs, however, should be the declining productivity observed across industries. C&B cost as a percentage of revenue has gone up by as much as 50% in some industries, on the back of higher headcounts, rising wages, increased competition, and a slowing economy.

While there is a war for talent, companies are becoming more wary of increasing headcounts and instead want to focus only on hiring quality talent. A cross-industry view of the Aon Hewitt 2015 China TCM Study revealed that headcount increase rates are projected to decline (to mostly single digits) across industries, with consumer goods being the only exception. Companies are willing to invest in longer-term measures like upskilling and reskilling employees, workforce planning and organisation redesign. On the rewards front, progressive companies are looking to develop a sustainable rewards strategy that rests on the three Ps of Pay for Performance, Pay for Position and Perceived Value.

Pay for performance: Companies with sustainable rewards programs are not just looking at increasing their overall budgets, they are allocating a bigger share of the pie to the top performers.

Across industries in China, top and high performers formed a significant 34% of the employees, yet only 42% of the total bonus pool was allocated to them for their efforts. Privately owned enterprises (POEs) are now taking the lead in sharper differentiation in performance and payouts, with bonuses for top performers going beyond three times target. Clearly, the intent is there, but the sustainability needs to be tested.

Pay for position: There is a distinct supply-demand mismatch in China with an aging, manufacturing-oriented workforce. Although the overall turnover for China has come down from 16.5% in 2014 to 15.1% in 2015, it still is high for an economy considered to be slowing down. The functions contributing to this turnover are not the core functions; rather, it is the key talent in engineering, R&D and internet who are being enticed away by attractive employer propositions.
Hence, companies are increasingly integrating their rewards programs with talent management and positioning key functions and critical positions at a premium compared to other functions. In fact, Foreign-Invested Enterprises (FIEs) and POEs are investing aggressively in research and product design and development and are paying local talent (at senior levels) on a par with the US.

Perceived value: The full spectrum of an organisation’s investment in fixed cash, bonuses, social and supplemental benefits, and career development now need to be re-evaluated for their efficacy as employee preferences. Some insured and non-insured benefits as well as career development programs designed just a few years ago are now being seen as budgetary burdens that do not deliver any quantifiable value for employees. Thus, Aon Hewitt in China is increasingly being engaged by companies to deliver Total Rewards Optimisation, which looks at rewards from a return on investment lens, thus delivering higher satisfaction rates on rewards and boosting retention.
What next?
The private sector will continue to innovate on practices that unlock the huge entrepreneurial potential of its aspirational workforce, especially the ‘millennials’. This generation has not only been brought up in a period of economic growth, they are also witnessing significant start-up successes amongst their peers. We will see more examples of aggressive Long-Term Incentive (LTI) plans and co-investment in POEs. The FIEs will have to leverage their robust practices and systems, while adapting their variable pay schemes to the Chinese market.
Career opportunities and Rewards continue to play an important role in China as detailed in the Aon Hewitt Best Employer 2015 findings[1]. The time is ripe now for HR to take a strategic and long-term view of talent and then integrate rewards with talent & performance. Identifying critical talent, high potentials and top performers through robust business and HR partnership will be a success factor for talent retention and development. Managers need to take tough decisions on rewards, as budgets will be limited and talent quite mobile.

The next few years will undoubtedly pose challenging questions for CHROs across China --questions that can only be answered through practices that are ground-breaking and fundamentally sound. Companies will need to identify their core strengths, key capabilities that need to be built, and the right strategies to build those capabilities. Organisation architecture, talent development, and rewards will need to rally around these identified capabilities. The organisations that ultimately succeed in doing this will be the ones who demonstrate not only speed-to-execute, but also great agility in adapting to the ‘new normal’.



With Stable Increase in Hong Kong Wages and Low Unemployment, How Will Employers Nurture the Right Talent?

Maximizing total rewards value as a differentiator

Hong Kong, October 29, 2015 – Today Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), shared the latest trends in compensation and total rewards at its Aon Hewitt Annual Rewards Conference – 2015 Hong Kong.

While the global economy has seen modest growth so far in 2015, global growth is projected to be slightly lower for the remaining of the year. Advanced economies have seen a small pick-up with the US in a generally good condition, but are experiencing temporary weakness. Europe enjoyed slightly improving growth despite turmoil in Greece, and Japan had a first quarter pickup but weaker underlying momentum in real wages and consumption. Meanwhile, emerging markets and developing economies have experienced a slowdown compared to recent years of turbo growth, due to lower commodity prices and tighter external financial conditions in Latin America and oil exporters, structural shifts combined with financial turmoil in China, and economic impact of geopolitical and economic factors such as in Russia. Overall though, 2015 is looking like it may usher a very slightly stronger growth in 2016.[1]

In Hong Kong, despite political instability earlier in the year and an economy relatively affected by the slowdown in world trade, the unemployment rate remains stably low with a seasonally adjusted unemployment rate at 3.3% in July-September 2015 for the third consecutive period, and a slightly reduced voluntary employee attrition of 12.6% in July 2014-June 2015 vs. 14% a year earlier. Wages increased at a stable momentum by 4.6% in June 2015 over a year earlier (i.e. basic wages, other regular and guaranteed allowances and bonuses).[2]

A closer look at Compensation Trends across industries and levels brings the following insights:

  • Driven by high growth in infrastructure planning and development (such as the Ten Major Infrastructure Projects), the Construction and Engineering sector enjoys the highest salary increases in 2015 (4.9% in 2015 and 5.1% projected in 2016)
  • Life Science (including pharmaceutical industry and medical devices) are unaffected by the global economic cycles, remain among the industries that delivered the highest average salary increases in Hong Kong in 2015 at 4.9%.
  • Although hit by reduced sales volumes, particularly in the luxury sector hit by decline in Mainland tourism and consumption, salaries in the Retail sector see a 4.9% increase in 2015. Although the situation is predicted to further deteriorate, employers maintained competitive compensation in an effort to hold on to their existing sales force and talent.
  • The Hospitality and Travel sector, also impacted by lower inbound tourist arrivals, and the Transportation and Logistics industry, affected by decreasing world trade, see the lowest salary increases at respectively 4.1 and 3.9%.

[To note that Hong Kong new Competition Ordinance to come into effect on 14 December 2014, will impact how industry bodies, employers and HR collect and peruse salary data intelligence going forward*.]
Gary Chin, Aon Hewitt Rewards Practice Lead in Hong Kong said: “With wages and increases remaining stable since 2011 (average increase of 4.5% over the past 5 years) denoting employers’ cautious approach to budgeting salaries, voluntary turnover is also slightly trending down this year at 12% from 14% in 2014 reflecting the ‘wait & see’ attitude of employees who hesitate a bit more before jumping ship”.

*See Aon Hewitt’s press release and analysis on competing in Hong Kong, dated 29 Oct 2015.

When observing salary budget allocations and bonuses, overall salary increase is projected to remain relatively aligned across employee levels, while variable payouts (as a proportion of fixed pay) dropped slightly in 2015 over 2014, reflecting the relative lower business performance in 2015.

The biggest salary differential (+64%) exists between Senior Management and Directors reflecting the importance placed by companies in strategic roles. The difference with the rest of the workforce further increases when including bonuses as allocated more, proportionally, to Directors.

Gary Chin said: “Overall, variable pay has slightly gone down, due largely to weakened business performance. Given finite budgets, employers are still attempting to differentiate merit increases and bonuses by performance level, although the variance in terms of the amounts received by top performers and their average performing counterparts have narrowed. This poses motivational and retention challenges to employers “

With the salary increase differential based on performance narrowing and the variable pay differential following the same pattern:

What can employers do to ensure they attract the right talent and nurture their workforces to stay and strive on the job?
Aon Hewitt TCM Survey Hong Kong further shows that there exists in 2015 more and more alignment between turnover reasons and retention measures, the first three being: Accelerated career development opportunities, Pay above market and Attractive benefit packages, while key measures taken to attract employees reveal that employers consider all aspects of Total Rewards in combination.

Kelvin Lam, Managing Director of Aon Hewitt in Hong Kong said:
“The Aon Hewitt’s approach to Total Rewards advocates a combined attention given to all “4 Quadrants” namely: a competitive Compensation package, meaningful or flexible Benefits, a Work Environment conducive to higher engagement, and Learning & Development programs that facilitate career progression, all in synergy. While we are seeing more and more employers acquiring the sense that they can’t compete without those, not all organisations and HR functions have yet the maturity to translate this into actions. Aon Hewitt research suggests that the best performing organisations(3) in that regard, do not have a higher HR budget, but a better use of it”.

In these cautious times, where employers in Hong Kong need to revisit data and budgeting almost month to month as the economy outlook fluctuates fast, a total rewards approach, and not only a monetary one, is what differentiate employers’ attractiveness and ultimately their business performance.


Aon Hewitt's View on Hong Kong's New Competition Ordinance

What HR Should Expect

Hong Kong, October 29, 2015 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), shared insights on Hong Kong new Competition Ordinance, how it will impact the Human Resources function and the immediate next step for HR.

The Competition Ordinance (Commencement) (no 2.) Notice 2015 was published in the Gazette on 17 July 2015, which appoints 14 December 2015 as the date for the Competition Ordinance to come into force. This Ordinance (which was first outlined as early as 2012) restricts four types of conduct which are described as anti-competition – pricing fixing, output restriction, market sharing and bid rigging. Though not specifically targeted at employment matters, it is clear that the Competition Ordinance (CO) restricts practices like wage-fixing, exchange of wage or benefits-related information, industry-wide negotiations that impact wages and similar employment terms, and non-solicitation agreements.

From December 14, 2015, job fairs, networking events and professional seminars will be added to the Compliance Department’s watch list as the new Competition Ordinance comes into effect in Hong Kong. This new legislation will have subtle but definite implications for the HR profession.

There are specific conducts which are classified as anti-competitive and are prohibited (Chap 619, S 2, “Interpretation”). These are:

1. Price Manipulation
The CO prohibits collusion between competitors on prices, price calculation formulae, discounts, etc., as this hinders competition. From an HR perspective, it prohibits two or more employers from sharing verbal or written, formal or informal information on wages, benefits, allowances, bonuses and other variable pay and other terms of employment. Mere sharing of information is sufficient to be in violation of the ordinance – no proof of actual action or anti-competitive consequences are required.

2. Market Division / Allocation
The CO prohibits firms from dividing or allocating customers, suppliers or geographies among themselves, instead of allowing firms to make competitive decisions around these. In an HR context, firms are prohibited from entering into formal or informal no-poaching agreements with competitors, except in extenuating circumstances e.g., as arising from a merger or divestiture.

3. Restriction or Control of Output
This is when competitors agree to limit the volume or type of goods or services they make available, as this behavior impacts the price of these goods and services in the market.

4. Bid Rigging
Bid rigging occurs when firms involved in a bid agree not to compete, or to compete such that a predetermined member of the group will win. In an HR context, this could extend to competing firms colluding on the hiring outcome of a candidate or a group of candidates.
It is important to note that the existence of any one or more of the conducts mentioned above could be sufficient for a firm to be in violation of the CO. Therefore, mere presence at a conversation at which sensitive information has been disclosed by a competitor, or being party to a non-binding wage-fixing agreement with competitors, could be a violation of the CO.

The Competition Tribunal has the power to take action against both individuals and companies who have contravened the CO. Potential penalties include fines, damages, voiding of agreements, director disqualifications, etc.

Immediate Next Steps for HR 

1. Review benchmarking practices
 The Competition Commission has acknowledged that market benchmarking is one of the legitimate reasons for firms to share sensitive information. However, the Competition Commission advises that the information be shared with a disinterested third party, who would then disclose the information to the competitors in an anonymized and aggregated format.

While most firms participate in market benchmarking surveys for information related to base or cash compensation, many firms rely fairly heavily on ‘informal sources’ for information on salary increase projections, allowances & benefits, and trends. Collecting sensitive information from these informal sources would be a violation of the CO and firms should therefore ensure that this information is collected through a disinterested third party going forward.

2. Review association and networking group memberships
Very often, firms are part of industry associations or networking groups, which meet periodically to discuss topics of interest. Sometimes, the purpose of these may be to share information that could be classified as sensitive information by the CO, eg. Employer associations which suggest reference wages or commission rates.
Firms should review all formal and informal association and networking group memberships, especially those attended by senior members of the HR team. Charters of formal associations need to be examined for compliance and modified, if necessary.Networking groups also need to agree on a list of topics that are ‘off limits’ in light of the CO.

3. Review internal wage-determination policies
While the CO does not apply to collective bargaining between an employer and a group of employees, any union / association which represents employees of more than one employer and which negotiates with more than one employer on wages and other employment terms, could be considered anti-competitive. Unlike some other jurisdictions with anti-competitive laws, the HK CO has not issued a blanket exemption for collective bargaining agreements. Firms need to obtain legal advice on any collective bargaining agreements and make alternative arrangements where the current ones may not be permitted. Also, any wages / commission rates, etc., which are set with reference to an ‘industry norm’ need to be audited to ensure that the method used to determine the industry norm did not involve anti-competitive activity.

4. Agreements which restrict hiring  
Agreements which restrict hiring from a particular competitor or a group of competitors (eg. no-poaching agreements) are considered anti-competitive, except when arising out of an M&A transaction and are only in force for a finite period. In the case that such agreements are already in place, firms would need to terminate them in light of the new regulations.
5. Training and policy formulation
Firms will need to invest heavily in training their HR teams on the implementation of the CO. It is important for HR professionals to be able to:

1. Identify sensitive information
2. Guard against providing sensitive information to competitors
3. Recuse themselves from discussions where competitors may be disclosing sensitive information
4. Neither confirm nor deny ‘market information’ from unauthorized, non-public sources
5. Use reliable, third-party sources when referencing market information in documents.
The CO is clear that disclosure of competitive information does not have to be in written form or in an official setting – it can be at a social occasion, over drinks, in an elevator, or even over instant messaging services. In addition to price-related information, quantity-related information like hiring strategies, headcount growth plans, etc., could also be classified as sensitive information.

Firms should also consider putting in place formal policies and guidelines that are specifically targeted at compliance with the Competition Ordinance.

In Conclusion
The Competition Commission has publically stated that it will make every effort to partner with trade associations and industry bodies to assist in compliance. The Commission will also inform organizations if they are under investigation and rapid corrective action on the part of the organization will be viewed in a favorable light.

This is the first time that legislation like this will be enacted in Hong Kong and the CO is expected to radically change the way that business is conducted within the Special Administrative Region. As implementation of the CO proceeds, it is expected that the Competition Commission will issue further guidelines and clarifications on the CO. It is important that firms take immediate steps to ensure that they comply with the CO, as non-compliance could result in penalties for both individuals and organizations, as well as significant reputational damage, which could have far-reaching repercussions for the firm.  



Aon Named a Winner of the 14th Annual Chicago Innovation Awards

Lincolnshire, IL, October 28, 2015 Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, today announced it has been named one of the winners of the 14th annual Chicago Innovation Awards.

The Chicago Innovation Awards is the Chicago region’s foremost recognition of the most innovative new products or services brought to market or to public service each year. Aon Hewitt was recognized for creating the Aon Active Health Exchange, the industry’s first and largest private health exchange built for large companies. As one of Aon’s private exchange solutions, the Aon Active Health Exchange creates a competitive marketplace for group health insurance by featuring multiple insurance carriers that compete for each employee’s business by offering a standardized menu of plans and coverage levels.

“Our team, working in partnership with our clients, developed an innovative solution to help manage costs, increase employee choice and improve health and wellbeing, while strengthening companies’ ability to attract the best talent and deliver on their commitment to their workforces,” said Kristi Savacool, CEO of Aon Hewitt. “The Aon Active Health Exchange addresses these issues in a completely new way—effectively applying competitive market forces and consumerism to group health benefit plans to drive down costs while providing broad choice and a high-quality experience for employees. We are honored that the Chicago Innovation Awards has recognized our groundbreaking work in this space.”

In 2015, more than 30 companies representing over 850,000 employees and their eligible dependents offered group health benefits through the Aon Active Health Exchange. Third-year enrollment results demonstrate that Aon’s exchange is delivering on its promise to control cost, engage consumers and offer broad choice. Companies going through their second-year renewal had average health care cost increases of 2.6 percent over the two years they were in the exchange. According to Aon’s post-enrollment survey, 97 percent of individuals completed enrollment through the Aon Active Health Exchange, and 87 percent of individuals liked being able to choose among multiple carriers.

The complete list of this year’s Chicago Innovation Award winners can be found at


Aon forecasts rising wave of scheme closures as low bond yields and high deficits take effect

London, October 21, 2015 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that as the full effect of pressures such as the ending of contracting-out and low bond yields become evident, it expects over the next 12 months to see more employers closing their defined benefit (DB) pension arrangements to future accrual. A recent Aon Hewitt survey of over 100 pension schemes of between £10 million and £10 billion showed a marked increase from last year in the number that were planning to close to defined benefit accrual.

James Patten, head of Pension Benefit Design at Aon Hewitt, said:
"While companies have been aware for some time that the cessation of contracting-out from April 2016 will lead to cost increases, this is proving to be a minor headwind relative to the tempest created by low bond yields and recent equity market turmoil. These have created soaring cash funding requirements and dents in reported profitability. “Our recent survey of UK schemes has shown a continued surge in the number of schemes in the private sector that are closed or closing to DB accrual. Around a third of all companies with ongoing DB arrangements, that have reached a view on how they respond to contracting-out, are looking to make more significant changes than purely offsetting the additional National Insurance (NI) payable from April 2016. In the vast majority of these cases this will mean closure to DB accrual.

“Accordingly, with nearly 30% of the contracted-out schemes that are currently open to DB accrual potentially closing during 2016, the proportion of DB schemes in the private sector that are closed to DB accrual could rise from around 50% at present to over 60% over the next year.”

James Patten continued:
“Our survey has shown that there are relatively few employers looking purely to mitigate the cost of contracting-out – it was just 12% of those surveyed where the employer had reached a view on the matter. It seems that employers are now typically either making more significant changes due to current market conditions or are choosing to stomach the cost - perhaps because they have already made changes to their scheme.

“However, a significant proportion of employers have yet to decide how to respond to the ending of contracting-out. We are finding many employers are looking to act quickly once a decision is made on the benefits. But a few past cases have demonstrated some of the pitfalls involved. Having support to execute these projects efficiently, sensitively and in a legally compliant fashion will be vital to ensure that changes are in place by Spring 2016, when the extra NI cost burden will start to impact on financial results.”


Technology Sector Hiring and Pay Remains Steady in Major Asia Pacific Markets

Against backdrop of slowing global economies, technology industry continues its dynamic evolution

Hong Kong, October 21, 2015 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON) and Radford, a part of Aon Hewitt, shared today the latest talent and rewards trends in the technology sector across Asia Pacific.

With global economic growth declining this year, mainly due to slower growth in emerging markets, Asia's largest markets are experiencing very different growth trajectories. Global GDP is now forecast at 3.1% for 2015, a decline from 3.4% in 2014 and economic growth across Asia and the developing markets is overall slower than anticipated.
In Asia's two largest emerging markets, China and India, the paces of economic growth follow their own patterns.

China's economic growth rate has been steadily declining from the double-digits last experienced in 2007 to a planned "new normal" of less than 7% as it rebalances its economy to more sustainable growth levels. At the same time, India's economy has rebounded from a low point of less than 4% GDP growth in 2008 with a steady acceleration, bringing it to a forecasted GDP growth rate of 7.3% for 2015. For other Asian economies, changes in GDP growth are more subtle. Japan, while dipping into a recession last year, may grow marginally this year. The five countries of ASEAN as a group may see growth of 4.6%, the same as last year.[1]

Within global economic flux, what is happening in the technology sector, and what does it mean for hiring, employee turnover and salary increases?

The technology industry continues on its rapid pace of innovation, disruption and creating new ventures through expansion and consolidation, industry convergence, and start-up activity. Spurred by advances in mobile, social networking, cloud, and e-commerce, the technology industry is experiencing a third wave of evolution characterized as the Internet of Things (IoT).[2]

Olivier Maudière, director at Radford, says: “Adding to this dynamic from a talent perspective are changing employee demographics and expectations about careers and how work gets done, enhanced by increased mobility and diversity of global talent. Increasingly in many emerging markets, foreign multinationals compete with leading local companies and start-ups as to who can offer the most attractive employee value proposition. This is especially true of the technology sector in Asia Pacific.”

Further demonstration of this is seen in the Radford Trends Report – Q3 2015 edition:
- On a global basis, 40% of technology companies expect to increase the size of their workforce over the next 12 months. Hiring will be strongest in the Internet/e-commerce and software sectors, where 50% of companies expect to hire and half of those plan to increase headcount by more than 15%.

- Geographically, the most aggressive hiring is planned for the US, China and India; the countries that are among the largest markets and largest hubs for technical talent. Ten% of companies plan aggressive hiring in China, while close to 20% of companies plan aggressive hiring in the US and India. In Singapore, APAC regional headquarters to a large number of multinationals, normal or selective hiring is planned, with only 6% of companies planning for aggressive hiring or growth.
- The flip side of hiring is voluntary employee turnover or attrition. Where there is more job opportunity, employee turnover tends to be higher. Voluntary employee turnover is running at about 11% in the US and China; in India, it is higher at 14%, while slightly lower in Singapore at 10%. However, turnover varies by industry sector, Internet/e-commerce is highest, and type of job.

- Overall salary increase budgets for 2016 are forecast at similar levels as in 2015. That means a continued 8% to 9% in China, 10% to 11% in India, and 4% to 5% in Singapore. 



Employers are Taking Action to Help Workers Close the Retirement Savings Gap


Aon survey shows more employers are making changes to their 401(k) plans to boost participation and encourage savings

LINCOLNSHIRE, Ill., October 20, 2015 /PRNewswire/ - With only one-in-five workers on track to retire at age 65, a new survey from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), reveals U.S. employers are taking steps to help workers save more and improve their long-term financial outlook.

Aon Hewitt's survey of more than 360 employers, representing over 10 million employees, shows 401(k) plans are shifting in three key areas:

Company Match: To encourage workers to save more, employers are putting more "skin in the game."

  • 42 percent of companies match dollar-for-dollar, up from 31 percent in 2013.
  • Before 2013, $0.50 per $1.00 was the most common formula.

Automatic Enrollment: Employers are defaulting employee contributions at a higher rate. Of the employers that automatically enroll their workers:

  • 52 percent automatically enroll workers at a savings rate of 4 percent or more, up from 39 percent of employers in 2013.
  • 51 percent default workers at or above the company match threshold, nearly 10 percentage points higher than in 2013.

Back-sweeping: Most employers only automatically enroll new hires, but many are taking action to ensure more workers participate in the plan. Currently, 16 percent of employers automatically enroll all eligible employees (also called "back-sweeping") on an ongoing (annual) or one-time basis—double the percentage that did so in 2013.

"With more workers falling short of their retirement savings needs, employers are being more aggressive about making plan design changes that will help workers close the savings gap," explained Rob Austin, director of Retirement Research at Aon Hewitt. "While these tweaks to the plan may seem small, they can have a profound impact on workers' ultimate retirement wealth."



Aon Announces Third Quarter 2015 Earnings Release and Conference Call


LONDON, October 30, 2015 – Aon plc (NYSE:AON), the leading global provider of risk management and human resource consulting and outsourcing, plans to announce third quarter 2015 results on Friday, October 30th, 2015 in a news release to be issued before the market opens. Greg Case, president and CEO, will host a conference call at 7:30 am Central Time on Friday, October 30th, 2015. The conference call will be broadcast live through Aon’s website at Adobe Flash is required to listen to this webcast. A replay will be available shortly after the live webcast. The earnings release and supplemental slide presentation will be available on Aon’s web site at




Sifting Through the Medicare Maze

Aon Hewitt Offers Tips to Seniors Enrolling in a Medicare Plan This Fall

LINCOLNSHIRE, Ill., October 8, 2015 – From October 15 to December 7, millions of Americans will have the opportunity to enrol in or change their Medicare plans during the Medicare Open Enrolment Period. This can be a daunting task for many seniors, according to experts from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON).

Aon Hewitt research shows that 60 percent of seniors are overwhelmed at the amount of information about Medicare health insurance. This can lead to less-than-ideal Medicare enrolment choices and often results in overspending on high premium plans. Additionally, plan designs, premiums, and networks continue to evolve each year, making it all the more important for seniors to do their homework, shop early and seek help to choose a plan that meets their needs.

“For many seniors, it is the first time they’ve had to think about enrolling in Medicare benefits, and they are not sure where to start,” explained Tina Maldonado, retiree experience leader for Aon Retiree Health Exchange, a comprehensive retiree health care exchange that has enrolled more than 500,000 retirees in Medicare plans since 2010. “The good news is that retirees have access to more help and assistance than ever before. They should take advantage of the resources and tools that are available to help them understand Medicare and enrol in the right plan to meet their individual health and financial needs.”

To ensure seniors optimize their health care choices, Aon experts offer the following tips this enrolment season:

Read the fine print. If you are enrolling in a Medicare plan for the first time, it’s important to understand how the plan works, what the plan will cost you (premiums and out of pocket expenses) and under what circumstances you can make changes to your coverage.

If you are already enrolled in a Medicare plan, you should have your annual notice of coverage from your carrier. read it. Take note of premium or benefit changes that could increase your costs. Understand what’s changing about your plan and whether it still meets your needs. If not, take action and get help to re-evaluate your plan.

Start early. Finding a suitable Medicare plan, especially for the first time, can take time and a lot of thought. Don’t wait until the last minute to start evaluating your options. If you are Medicare-eligible for the first time or have access to a special enrolment period, failing to enrol on time could mean you are left with a basic Medicare plan that may only cover about 80 percent of approved claims and puts no limits on the amount you could owe after Medicare pays their portion. It can also result in Medicare Part D late enrolment penalties, which can increase your costs.

Do your homework. As you begin evaluating your options, here are some questions to consider:
  • How is your health? Have your needs changed since last year?
  • Do you anticipate any significant life changes this year, like a move?
  • What prescriptions are you taking?
  • Are there specific doctors that you want to keep seeing?
  • What type of premium can you afford?
  • Do you have a chronic condition?

Look at your overall costs. Don’t make your decision based on the premium alone. Instead, estimate your likely overall costs to include premiums, co-payments and deductibles. Always consider the out-of-pocket maximum as well, which is a good reflection of your worst case exposure for a significant medical event.

Don’t forget prescriptions. Most people find that prescription drugs make up the biggest portion of their medical spending and can change year to year. Inventory your current prescription drugs list and look for plans that will cover them all. Changing to generic medications or filling your prescriptions at a different pharmacy may also have a big impact on what you pay out of pocket. Review your Medicare Part D coverage annually to make sure your coverage continues to support any of your personal changes in medication regiments.


Shop around. Medicare exchange marketplaces, which work similar to other online shopping marketplaces, offer hundreds of Medicare plan options and insurance companies that allow you to sort and filter by price, insurance company and other criteria to find a plan most suited to meet your needs. You can also speak directly with a licensed benefits advisor who can help guide you through the decision making process, help you understand the various types of coverage, assess your needs, choose a plan and complete an application.

Take advantage of tools and help. There are a number of tools and resources available today that can help simplify this often complex process. Websites like, provide on-line decision support tools that help you learn about the basics of Medicare and compare a variety of local Medicare insurance products quickly and conveniently in the comfort and privacy of your own home.



U.S. S&P 500 Pension Plans See $102 Billion Increase in Funded Deficit in the 3rd Quarter

Aon Hewitt analysis finds the overall deficit has increased by $40 billion for the year 

LINCOLNSHIRE, Ill. October 7, 2015 – According to an analysis from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), the funded status deficit of U.S. pension plans increased by $102 billion in the third quarter of 2015, a shift from the previous quarter that saw the deficit decline by $81 billion. Year-to-date, the funded status deficit has increased by $40 billion.

Data from the Aon Hewitt Pension Risk Tracker, which evaluates daily funded status for S&P 500 companies with defined benefit pension plans, shows the aggregate funded ratio decreased from 83.5 percent to 78.7 percent. The change was largely driven by asset reductions of $79 billion along with liability increases of $23 billion year-to-date.
“Volatility in equity markets—particularly poor performance in August—drove the decline in funded status for the quarter,” said Ari Jacobs, Global Retirement Solutions leader at Aon Hewitt.

Third Quarter Findings:

- Return-seeking assets declined heavily. The Russell 3000 Index returned -7.2 percent. - Bonds outperformed equities during the quarter, with the Barclay’s Long Gov/Credit Index returning 2.2 percent over this timeframe. - Overall pension assets returned -3.5 percent over the quarter.

Among private-sector defined benefit plans with glide paths in place, approximately 5 percent executed a de-risking transaction in the third quarter and the average size of those transactions was a 2.6 percent shift from return-seeking assets to liability-hedging.


Business Insurance names two Aon executives as 2015 Women to Watch

LONDON – Aon plc (NYSE:AON), the leading global provider of risk management and human resource consulting and outsourcing, recently announced that two executives have been named to Business Insurance magazine’s 2015 Women to Watch list: Amanda Nguyen, managing director at Aon Benfield; and Rachel Ingle, managing director at Aon Hewitt.

Since the program was introduced in 2006, one or more Aon leaders have been named to the Business Insurance Women to Watch list each year. A total of 22 Aon leaders have been awarded the distinction.

Amanda Nguyen, who has been with the firm for 14 years, serves as a managing director at Aon Benfield, where she is responsible for growing product lines, increasing the firm’s book of business and developing innovative reinsurance programs for clients. A key responsibility has been leading the Aon Benfield Environmental Liability Practice group for seven years. Previously, Nguyen served as assistant vice president, where she gained experience on some of Aon Benfield’s largest U.S. client accounts.

Rachael Ingle has made a considerable impact on the firm, her clients and Irish workers during her 17 year career at Aon Hewitt. As managing director of the Irish Retirement and Investment business, she is responsible for more than 150 colleagues across Ireland, has regional responsibility for projects impacting Europe and is part of Aon Hewitt’s global leadership team that drives and implements decisions on the strategic direction of the company. Rachael has been instrumental in shaping the pension landscape and driving key reforms for Irish workers. As a Council member and immediate past Chairwoman of the Irish Association of Pension Funds, she has worked closely with government officials to help shape current and future retirement policy in Ireland.

“We strive to provide unparalleled service and innovative solutions for our clients by developing and retaining the best talent in the industry,” said Greg Case, president and chief executive officer of Aon. “The depth of experience and expertise that Amanda and Rachael bring to the firm as well as to their clients and colleagues is a tremendous reflection of that focus. We are honored to have these outstanding leaders named to this prestigious list.”

Business Insurance's Women to Watch list is an annual feature spotlighting 25 women who are doing outstanding work in commercial insurance, reinsurance, risk management, employee benefits and related fields, such as law and consulting. Honorees are selected by a panel of senior editors at Business Insurance who consider various criteria, including recent professional achievements, influence on the marketplace and contributions to the advancement of women in business.




Aon completes line up of DC services with launch of the Aon MasterTrust


Expert trustee board selected to provide scheme governance

LONDON, October 5, 2015 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has announced the launch of The Aon MasterTrust, completing the company’s line up of services for the UK’s defined contribution (DC) market.


The Aon MasterTrust will be targeted at occupational trust-based pension schemes – initially of a minimum size of £20 million – which no longer want to deal with the burden of today’s regulatory compliance but who also want to offer their members a modern, professionally managed scheme with a competitive drawdown solution.

Sophia Singleton, partner and head of DC Consulting at Aon Hewitt, said: “Running a pension scheme is not getting any easier – in fact, it’s getting increasingly onerous, complex and costly. With the launch of The Aon MasterTrust we have aimed to deliver a solution which offers employers the best of both worlds – a trust-based approach which is outsourced to experts. We are also fulfilling an increasing demand; responses to our upcoming DC survey showed that almost 10% of schemes expect to convert to a master trust over the next five years.

“By launching Aon MasterTrust we are also completing Aon’s range of DC services – advisory, investment only, bundled services, contract-based and now a master trust. The new pension freedoms have also increased demand for decumulation solutions so now is the perfect time to launch our product which includes in-built drawdown.”

Sangita Chawla-Jopling, partner and head of DC Product at Aon Hewitt, said: “We believe the benefits of the master trust approach are considerable. As a multi-employer scheme, The Aon MasterTrust allows schemes to reduce their governance burden while retaining strong and independent management. It also allows employers to shed the responsibility of legacy trust schemes without relying on member consent, but offers the opportunity to deliver a better employee experience and better value for members, courtesy of the master trust’s scale.”

Key features of the Aon MasterTrust

  • A consolidated governance model to reduce costs and risk while retaining management and oversight by an independent professional trustee board
  • Service delivered by teams of experts covering investment, administration and communication
  • Leading edge investment options, backed by global DC investment expertise
  • A fully packaged solution delivering a better employee experience through strong member engagement and customer service, market leading financial aggregation tools and superior investment solutions
  • Easier retirement decision making for employees through a built in drawdown option and retirement support
  • Ability to consolidate legacy assets
  • Demonstrable value for money for members through greater scale
  • Provides future proofing through ongoing innovation and development
  • A fully automated auto-enrolment solution
Experienced trustee board 

The Aon MasterTrust will benefit from a board of trustees which is independent from Aon and which will oversee all participants’ sections of the master trust.

To achieve this, Aon has brought together a three person trustee board of the highest quality and experience; chairman Roger Mattingly of Pan Trustees will act as chairman, alongside, Nicki Mortimer of Capital Cranfield and Kim Nash of PTL. Their key purpose is to ensure the best interests of scheme members by working with the Aon MasterTrust team and providing an independent view of the master trust’s operation.

Roger Mattingly, chairman of The Aon MasterTrust trustee board, said: “The Aon MasterTrust will provide an excellent alternative approach for many pension schemes seeking the economies and benefits of scale, as well as relief from the increased weight of regulation borne by today’s schemes.

“As trustees we will ensure that members’ interests are looked after and that they can be confident their views are pursued without fear or favour. We will be an independent body but will work closely with the Aon team to ensure the best results for all scheme members.”

Sangita Chawla-Jopling said: “We wanted The Aon MasterTrust trustee board to be composed of high calibre independent professionals, so we are very pleased that Roger Mattingly, Nicki Mortimer and Kim Nash have agreed to take on the roles. I am confident that they will provide the knowledge and the independent approach that will challenge us to provide the best possible service.”



Aon rejects ISA-style pension system


Recommends a new incentivised approach in its response to the Government’s pension tax consultation

LONDON, October 1, 2015 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has rejected ISA-style pensions in its response to the government Green Paper on pension tax.

Aon’s response highlights that an ISA-style system, where pensions are taxed as people save, as opposed to the current system where pensions are taxed when they are drawn, would fail to appeal to savers and employers. It highlights that such a system removes any incentive for employers to support a workplace pension scheme. In addition, Aon believes this model would not allow Government flexibility over future revenue raising as it disconnects raising taxes from the period during which those taxes will be required. Finally, members have expressed a concern that future policymakers may renege on their promise of keeping pension income tax free.

Instead, Aon has proposed an innovative new pension system where pension contributions would be paid from post-tax pay but with an explicit government bonus. This incentive-based approach* - Incentive, Exempt, Taxed (IET) -means that for each £2 the member or employer pays into their defined contribution (DC) pension pot, the Treasury would pay an additional £1 bonus directly into the member’s pension account. Both employee and employer contributions would qualify uniformly for the Treasury bonus with a maximum pension annual allowance of £30,000 (£20,000 plus a £10,000 government bonus).

Aon’s proposals include a five year carry forward to recognise variable earnings patterns, particularly among the self-employed, and to enable those who start pension saving later in their career. The existing lifetime allowance would be scrapped for DC schemes and all people, including those with Lifetime Allowance protections, would be able to pay de minimis contributions of £2,000 per annum (with a £1,000 bonus).

Aon’s model aims to recognise and anticipate the financial pressures faced by savers at different points in their lives. It offers early access for young savers, to build on the success of auto-enrolment. It also offers incentives to leave pension savings invested for longer, in recognition of the challenges presented by an ageing society.

Kevin Wesbroom, senior partner at Aon Hewitt, said:

“We believe that simplicity and understanding are critical to encourage individuals to save for retirement. Incentives should be simple for individuals to follow – a bonus is much greater motivation than tax relief. A simple transparent system will also keep future policymakers honest.

“Our proposals recognise the realities we face in relation to pension saving - young people have priorities other than pensions and at the same time longevity will increasingly place financial strain on our pension and healthcare systems. Any redesign of pension taxation should give clear signals of the consequences of longer working lives. We believe it should pay to work and pay to save.

“In our view, employers have a key role in setting out sound long-term savings and investment policies and our proposals ensure that existing incentives remain for employers to continue to support pension saving.”

Aon Hewitt poll results show support from pension professionals
This view is shared by the majority of over 200 pension professionals that attended an Aon webcast on 29 September. Only 8% of the respondents to the poll thought that an ISA-like pension system would be preferable while the vast majority (40%) would go for the Aon model with 32% of them wishing to retain the current system with some changes.

Additional features
In addition to the features outlined above, the Aon model features three components – a Foundation Phase for younger savers, a Pension Growth Phase and a Distribution Phase when members start thinking of how to use their pension pot, using the 2014 Pensions Freedoms.

Clare Abrahams, DC consultant at Aon Employee Benefits, explained:
“During the Foundation Phase, younger members would be entitled to withdraw their personal contributions (but not the employer’s) from the pension scheme should they require to do so, repaying the linked Treasury bonus. We recognise the challenges in encouraging younger workers to save for retirement as the financial pressures of repaying student loans, purchasing property and other major life events tend to take financial precedence.

“By building on auto-enrolment mechanisms, but offering a window during which young people need not fear their personal savings are locked up for years ahead, we believe we can reduce opt outs from auto-enrolment, and encourage young members to build up pensions savings from an early age.”

Lynda Whitney, partner at Aon Hewitt, continued:
“In the Distribution Phase of our proposals, we aim to encourage people to consider leaving their savings invested for as long as possible to provide a sufficient retirement income later in life. Tax free cash would stay at 25% at State Pension Age, but with a higher rate if left longer, and lower rates if drawn earlier.

“We also believe the pension system should recognise that there is a need to encourage savers to provide for their very long term needs and our proposed system includes an additional annual allowance where contributions are applied to secure later life income or to meet the costs of long-term care.”