Aon Retirement Plan Support

The ARP provides benefits to many of its members on a Defined Benefit (DB) basis. This means that the Company has promised a level of pension each year rather than a pot of money for members to spend on buying a pension (a Defined Contribution pension). 

To ensure the ARP is able to continue to do so in future, the Trustee has been gradually securing pensions for DB members by buying insurance policies. This is often referred to as a 'buy-in'. Under these policies, each insurance company promises to pay the Trustee the pension payments that need to be made by the ARP for the specified group of members covered.

These insurance policies are an investment of the ARP held in the Trustee’s name. In other words, the policies don’t belong to the specific members covered; they are one of the ARP’s assets.

Insuring pensions reduces the risk of the ARP not having enough money in the future to pay these benefits. It also provides additional security for members’ pension benefits as insurance companies are subject to a strict regulatory regime. 

Once all DB pensions have been insured, it also means Aon won’t have to fund the ARP further (in respect of DB members). The insurance company will match the payments due to members by paying an equivalent amount into the ARP each month.

Under a ‘buy-in’ insurance policy, there is no change in administration. The administration team continues to pay pension benefits and deal with member requests (such as transfer value and retirement quotations) and correspondence on behalf of the Trustee as it does now. 

We'll carry out a careful review of the insurance market, complete a tender process and take independent professional advice before choosing an insurer. 

We'll consider the insurer’s financial strength, its ability to provide administration services, its Environmental, Social and Governance policies, its contract terms and the cost of the policy.

The insurance will be bought using the ARP’s current assets.

The transaction would not affect members' ability to transfer out of the ARP. Benefits that are not yet in payment can be transferred, subject to the usual requirements (including financial advice if the value of the benefits is greater than £30,000).  

This won’t affect members' other ARP entitlements during the buy-in period. Members will continue to have the same options for drawing these benefits.

Yes. There will be no change to the rules for taking early retirement. 

You should contact the administrators in the usual way if you would like a retirement quotation.

There'll be no change to the rules for taking a tax-free cash sum at retirement.

UK insurers are subject to strong regulatory requirements which ensure they hold substantial capital to support all their commitments to policyholders.

Significant extra capital is held as a contingency which supports the insurer’s ability to continue to be able to meet these commitments under extreme scenarios.

In the unlikely event that an insurer is unable to pay benefits, policyholders also benefit from the backing of the Financial Services Compensation Scheme.

You can find out more about the Financial Services Compensation Scheme at their website, by visiting www.fscs.org.uk.

If the buy-in insurance policies are converted into a buy-out at a later date, the relevant insurer with whom benefits are secured would make payments directly to affected members and take over the administration of those members' benefits. 

If this were to happen, you would be contacted well in advance with more details. 

Furthermore, this would not change the benefits you receive; you would just receive them from the insurance provider rather than the ARP.