Over the last year, Aon has written to over 7,000 Plan members who are yet to draw their benefits, with a limited period offer to transfer out of the Plan on more generous terms than those usually available. This initiative followed the successful ETV exercise carried out for the Aon Minet Pension Scheme announced in 2017 which achieved a 33% take-up and buy-out savings of £60 million.
For members approaching retirement, this exercise included use of the Aon Retirement Options Model (AROM), Aon’s online financial education tool which helps pension scheme members to understand the different ways in which they can take their pension benefits following the introduction of Freedom & Choice in 2015. AROM helped members to explore their options before speaking to an IFA, while also saving on advice costs in the event of a member deciding the option was clearly not appropriate for their personal circumstances.
Andy Kieran, Chair of Trustees of the Aon Retirement Plan, said: “The Trustees were very supportive of Aon's offer to the Plan's members and we worked closely with the company throughout. The Trustees felt that the ETV offer was a logical next step in the Aon Retirement Plan’s journey to de-risk whilst providing members with an opportunity to consider, alongside an IFA, whether the new freedom and choices were appropriate for them. The offer complemented other recent de-risking projects the Trustees have overseen including the £900 million pensioner buy-in completed in 2016.
“The use of the Aon Retirement Options Model was well received by members who were approaching retirement. Its use gave the Trustees confidence that members were making well-informed decisions and only those wishing to explore further required support from the IFA, so costs were lower.”
Tom Clarke, senior consultant and Member Options specialist at Aon said: “As part of this exercise, members who chose to transfer their benefits were offered an enhancement to the standard transfer terms. Members who decided that the offer was not right for them, together with those members who have already retired, will benefit from their continued membership of the Plan which is now reduced in size and – most importantly – risk.
“More generally, we are helping our clients – Aon’s own schemes included – by bringing together member options projects and risk settlement transactions under our liability settlement framework. This accelerates their pension schemes’ de-risking journeys and helps to meet the objectives of both trustees and sponsors. We are increasingly seeing sponsors and trustees regarding these exercises as a win:win for all parties.”
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