Aon Hewitt has announced the launch of Aon Delegated DC Services for trust based defined contribution (DC) schemes. The service brings together Aon’s DC and investment expertise with the aim of positioning DC schemes for more effective investment and better member outcomes.
Aon Hewitt has successfully run fiduciary management for defined benefit schemes since 2010 and can now use the experience and expertise gained for the benefit of trust-based DC schemes. This will enable schemes to access professionally constructed investment choices, offering better diversification through a wider range of investment options and a more nimble approach, while allowing trustees to focus on more strategic issues.
Trustees will have the option of using the investment options in their own lifestyle design or accessing directly a range of Aon-designed target date funds. In a pensions landscape that has seen considerable change in just the last year, the service’s ability to offer continuous innovation both ensures that trustees can stay abreast of market changes and that the scheme can meet the evolving needs of its members.
Andy Cox, chief executive of Aon Hewitt in EMEA, said:
“Creating better DC has been a key aim for us for some time. That means delivering a more effective investment approach, capable of greater speed of action, using best in class managers and better diversification – all with the ultimate aim of better outcomes for members.
“Aon Hewitt has gained valuable experience in fiduciary management over the last five years and with the deep knowledge within the business of DC issues, we are ideally placed to offer schemes a delegated investment service which can have a real impact on member outcomes.”
Trustee boards of DC schemes that choose the new service will have the opportunity to work with Aon Hewitt’s investment experts to develop their investment strategy and flight paths and to set their scheme objectives. Aon then implements the strategy on the trustees’ behalf.
The investment platform for the service is provided by BlackRock. BlackRock’s investment platform will allow Aon Hewitt’s clients access to a full range of Aon managed funds, including target date funds and customised solutions. BlackRock will also provide the operational platform on which Aon Hewitt can deliver its services.
Paul Bucksey, managing director of BlackRock’s UK Defined Contribution business, said:
“This is a compelling new service for DC schemes which aims to provide better outcomes for pension savers. With access to the broadest range of investment tools, a global view and an established risk analysis framework, we are uniquely positioned to provide the investment infrastructure behind it.”
Key features of the service
• Fully managed investment delegation
• Simplified yet sophisticated investment menu
• Comprehensive reporting package to trustees and members
• Transparent, charge cap compliant investment fees
• Market-competitive charges for the service
Sophia Singleton, partner at Aon Hewitt said:
“Achieving the best possible member outcomes is always the fundamental aim of a pension scheme, whichever structure it adopts. But the nature of DC schemes is that a member’s individual pension pot at retirement is directly influenced by both the investment approach adopted and market movements at any one time. That brings the need for adopting the most efficient approach very clearly into focus.
“By taking the delegated approach, DC schemes can improve their governance, execute their longer term strategies and give themselves the best chance of delivering the best outcomes for members.”
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