UK/US - Aon has proposed cuts to both its UK and US defined benefit plans worth US$60m annually, with UK members facing the termination of future salary and service benefits.
Effective January 1 next year, future benefits in the company’s US DB pension plan will be calculated based on a career average pay formula rather than the traditional final average pay formula. Aon said the change would affect around 11 000 active employees.
"For UK DB pension plans, the company is proposing to cease crediting future benefits relating to salary and service, subject to trustee approval and member consultation," Aon said, and added that changes would likely take places during the first half of 2007.
Aon also proposed that future pension provision be provided under the defined contribution section of the Aon UK Pension Scheme, subject to trustee approval.
Greg Case, Aon president and CEO, said the firm had contributed more than $1.1bn to fund retirement benefits for participants in the US and UK plans in the past five years.
"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,” said Case.
"These proposed changes are expected to result in annual expense savings of approximately $60 million."
In other news, Aon announced third quarter net income of $106m, down from $122m for Q3 in 2005. Consulting revenue increased 2% to $301m, while total revenue increased 7% to $2.2bn.
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