UK - Insurance broking and risk management firm Aon has launched a pension scheme insurance product.

It said its new Pensions Security Indemnity product "provides security for pension schemes by making a cash injection, should a company default on the scheme".

It operates in the same way as the Letter of Credit (LOC) approved by the Pension Protection Fund and is fully compliant with the regulatory guidelines on contingent funding.

Donald Duval, chief actuary of Aon Consulting, said: "One of the biggest problems in pensions today is how to give security to pension members without causing major disruption to the finances of the sponsoring employer. 

"This unique product helps to square that circle.  It gives security to trustees and members, without tying up large amounts of the company's capital."

Paul Campbell, product development leader at Aon Risk Management Solutions, added: "The level of pensions deficits continues to create a financial headache for UK companies despite improved investment performance over recent years. Scheme members and trustees are also more aware of the risk to their pension benefits created if the sponsoring employer becomes insolvent.

"With no obvious end to the corporate pensions crisis in the UK, this product from Aon addresses a number of the financial concerns around pensions.  It provides another option for businesses dealing with legacy defined benefit (DB) pension issues, in a way that will also be beneficial for trustees and members.  PSI can help even those companies with the largest pension deficits in the UK."