Aon adds own Irish legacy DB schemes to cross-border IORP
Aon has moved its four Irish legacy defined benefit (DB) pension schemes to UnitedPensions, the multi-employer cross-border pension fund it runs in Belgium.
The four schemes, with around €60m-€70m in assets, were transferred at the beginning of June. All liabilities were transferred.
Aon Ireland injected €11m of capital into the Irish plans so they would be fully funded in line with Belgian requirements, according to Rachael Ingle, managing director at Aon Hewitt in Ireland.
The transfer makes Ireland the third country to be represented in the UnitedPensions vehicle, with DB retirement benefits also provided for employers in the Netherlands and Belgium.
UnitedPensions is also extending coverage to deliver defined contribution in the Netherlands, Italy, and potentially Spain and France, according to Ingle.
In opting to move the Irish DB schemes to UnitedPensions, Aon Ireland was motivated by a desire to continue to support its DB schemes but to do so with a better governance structure, she said.
One benefit of using the Belgian vehicle was that the company would no longer have to have quarterly meetings with the trustee boards of the four different schemes.
At the same time, Aon Ireland has kept a pensions council to ensure there is still a voice for the DB plans’ membership, although those on the council will not have a fiduciary management role. This has shifted to the Belgium-based IORP, which has a fiduciary role delegated from the sponsor Aon Ireland.
In UnitedPensions, the Irish schemes are in a section of their own, as each employer’s pension is fully segregated to provide assurance that retirement benefits are secure and ring-fenced.
“The board that governs the Belgian IORP looks at how each of those different sections are doing,” said Ingle.
Benefits continue to be administered locally in Ireland and investment advice is provided locally by a consultant. Aon Ireland is responsible for the funding policy. The actuarial work is a combination of the Belgian actuary responsible for the UnitedPensions and Ireland-based actuaries.
“For me it’s getting the best of both worlds – the best of the local advisory piece in a vehicle that is centralised,” said Ingle.
Aon Ireland decided to proceed with the move after carrying out a feasibility study to see whether the Belgian vehicle it had created for use by other employers would be of use to itself.
The transfer process took around 18 to 20 months.
“These things are never straightforward,” said Ingle. “One of the challenges at the beginning was about how to manage the pathway with all the different employers, with the trustees of the four different schemes, and how to make sure our membership would understand what was happening.”