Defined BenefitJun 4 2018

Consultant pays out £400m in pension transfer exercise

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Consultant pays out £400m in pension transfer exercise

Consultancy firm Aon has paid out £400m in pension transfers to members of the Aon Retirement Plan, after offering enhanced transfer values.

According to the firm, the bulk enhanced transfer value (ETV) exercise had a take-up of 22 per cent.

The plan, which has assets of £3.5bn, saw its buy-out position improve by more than £80m after the exercise.

Over the last year, Aon wrote to more than 7,000 scheme members who were yet to draw their benefits, with a limited period offer to transfer out of the plan on more generous terms than those usually available.

The consultant said this initiative followed the successful ETV exercise carried out for the Aon Minet Pension Scheme, announced in 2017, which achieved a 33 per cent take-up.

Members which were the target of the exercise had access to Aon Retirement Options Model, the consultant's online financial education tool, which helps scheme members to understand the different ways in which they can take their pension benefits.

This tool helped members to explore their options before speaking to an IFA, "while also saving on advice costs in the event of a member deciding the option was clearly not appropriate for their personal circumstances," a spokesman for the provider stated.

According to Andy Kieran, chair of trustees of the Aon Retirement Plan, the exercise was a logical next step in the scheme's journey to de-risk whilst providing members with an opportunity to consider, alongside an IFA, whether the new freedom and choices were appropriate for them.

He said: "The offer complemented other recent de-risking projects the trustees have overseen including the £900m pensioner buy-in completed in 2016."

Tom Clarke, senior consultant and member options specialist at Aon, argued that "members who decided that the offer was not right for them, together with those members who have already retired, will benefit from their continued membership of the plan which is now reduced in size and – most importantly – risk".

Since the introduction of pension freedoms in 2015, the number of people transferring out of their final salary pensions has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access their cash.

According to data from the Financial Conduct Authority (FCA) £20.8bn was transferred out during 2017, more than double the volumes registered in the previous year.