November 2, 2006 (PLANSPONSOR.com) - Insurance and
consulting firm Aon has announced proposed changes to its US
and UK defined benefit pension plans.
According to the announcement, effective January 1,
2007, future benefits in Aon's US DB plan will be
calculated based on a "career average pay" formula
instead of a "final average pay" formula. The change is
anticipated to affect approximately 11,000 active
employees covered by the US plan. In addition, the firm
said it has proposed for board approval that future
benefits based on salary and service be stopped for
employees in its UK plan.
"We believe these changes will help Aon better
manage its overall future compensation cost structure,"
said Greg Case, Aon president and CEO, in the
announcement. Case said the company's merit-based reward
programs will receive increasing company contributions in
The changes are expected to save Aon approximately
$60 million in annual expense.
The US DB plan was closed to new members as of
January 1, 2004 and the UK plan was closed to new members
as of January 1, 1999.