Aon amends own UK and US pension funds
GLOBAL - Aon is planning to make changes to its UK and US defined benefit pension funds to save $60m (€47m) a year in a move that will affect almost 13,000 employees.
The Chicago-based company said today announced the proposed changes "to maintain competitive retirement benefits for its employees while reducing future pension costs".
The changes, to come in from the start of next year, would not affect benefits earned prior to the effective date of the changes.
In the UK, Aon will cease crediting future benefits relating to salary and service, subject to trustee approval and member consultation.
This would hit around 1,700 active employees and is anticipated to take effect during the first half of 2007.
Aon said: "Subject to approval of the trustees, it is proposed that the future pension provision will be provided under the defined contribution section of the Aon UK Pension Scheme.
The UK DB plans were closed to new entrants as from January 1 1999.
The US changes, affecting 11,000 staff, would see its DB fund move to a "career average pay" formula from "final average".
"We believe these changes will help Aon better manage its overall future compensation cost structure," said Greg Case, Aon's president and chief executive officer.
"Over the last five years, Aon has contributed more than $1.1bn to fund retirement benefits for participants in the US and UK plans.
"These plans will continue to provide competitive retirement benefits for our employees, however, merit-based reward programs will receive an increasing portion of company contributions going forward."
Aon yesterday unveiled that third-quarter consulting revenue increased 2% to $301m.
Elsewhere, Marsh McLennan said that third-quarter revenues at its Mercer Human Resource Consulting arm increased by 10% to $762m.