Aon Corporation : Aon Hewitt calls for legal stability and transparency rather than burdensome overhaul of EU pension fund legislation

European employers' survey reveals regulation - and fear of regulation - as key barrier to cross-border pension arrangements

Major overhaul of the EU pension fund directive is unnecessary - greater transparency and better communication of the existing EU regulatory framework is required

Legislative changes should expand availability of occupational pensions not increase employer costs

LONDON-BRUSSELS 4 January 2012 - Aon Hewitt, the global human resource consulting and outsourcing business of Aon Corporation (NYSE:AON), has responded to the second round of consultation launched by the European Insurance and Occupational Pensions Authority (EIOPA) on the review of the EU IORPs Directive.  Aon Hewitt argues against legislative changes that will increase the cost for employers rather than expanding the availability of occupational pension arrangements for employees.

Leonardo Sforza, head of Research and EU Affairs at Aon Hewitt, said:
"Cross-border IORPs offers multinational employers a valuable business opportunity to drive operational efficiency in their pension provision and as well offering significant improvements to their pension plan governance.

"However, the results of our recent survey of European employers, clearly illustrate the widespread concern over pensions regulation. Nearly three-quarters of those surveyed cited an overly complex regulatory environment as the most important factor hampering the provision or the expansion of occupational pension arrangements. Further tinkering with the structure of the EU pension fund directive is not required. What is needed is a common definition of what constitutes cross-border activity and greater simplification of the statutory requirements for setting up cross-border arrangements."

The Aon Hewitt survey carried out in December 2011 polled 60 major corporations operating within Europe with workforces in excess of 2 million employees.  When questioned about the relevance and pertinence of cross-border arrangements, 76 percent of companies expressed support for such opportunities. However, the top three factors stopping employers from establishing pension arrangements at cross-border level were cited as:

• The perceived complexity of legislation (66%)
• Lack of clarity on how legislation is implemented and regulated (48%)
• The perception of cumbersome national legislative requirements (40%)

Another third of respondents hesitated to leverage the Single Market opportunity due to a fear that potential legislative changes would make these arrangements more costly.  Kevin Wesbroom, UK lead of Global Risk Services at Aon Hewitt, said:
"Given the material implications of the possible changes outlined in the EIOPA consultation paper, we are concerned at this stage at the lack of a thorough impact assessment and cost benefit analysis. The blind transposition of the Solvency II requirements from the insurance sector will undermine the affordability of employer based pension arrangements and overburden their management.

"In our European employers' survey, three-quarters of respondents indicated that a possible alignment of pension fund solvency requirements with those in place for insurance companies, would increase the cost and affordability of pension provision. Just under half said they would provide only pure defined contribution pensions, which may well be less attractive to employees, while a significant number talked of benefit reductions in response to these legislative changes."

Leonardo Sforza continued:
"On the basis of our practical market experience with multinational clients, we are in favour of greater transparency and better communication of the EU regulatory framework already in place. However, even the best legislative framework is unlikely to produce any positive impact without rigorous implementation at the local level.  Beyond their respective institutional duties, EIOPA and the European Commission have a crucial role to play in ensuring the effective implementation of legislative requirements. A renewed joint effort by both institutions is also required in terms of better communication vis-à-vis key stakeholders such as pension fund professionals, employers and employees associations. They should be directly involved in the design and launch of a new information and communication initiative that needs to be deployed at the national level."

Aon Hewitt believes that the following preliminary questions should be addressed in the impact  analysis:

• What are the real problems that must be solved?
• Which categories of pension vehicle do these problems apply to?
• How do the proposed solutions address the problem?
• Are the costs and negative impacts justified by the benefits from mitigating whatever the problem is?
• What alternatives are there to solve these problems, beyond legislative changes at the European and/or national levels?"

ENDS

Notes to editors

About Aon Hewitt
Aon Hewitt is the global leader in human resource consulting and outsourcing solutions.  The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance. 
Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.  With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees.  For more information on Aon Hewitt, please visit .

About Aon
Aon Corporation (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit to learn about Aon's global partnership and shirt sponsorship with Manchester United.

Media Contacts:
Colin Mayes
Aon Hewitt
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Giles Abbott
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