Pension provider Aon has proposed to cut its employer paid pension contributions as part of cost cutting exercise designed to protect the business from the recession.†
The firm, which employs just under 5,000 staff members in the UK, has started a two-month consultation on the changes, which it hopes to implement in July.†
Employees belonging to the firm’s defined contribution (DC) pension scheme will see employer-paid contributions reduced by up to half in some cases. For example members over the age of 50 could see the standard contributions paid by their employer reduced from 12% to 6%. Meanwhile members in their forties could see their contributions reduced from 10% to 6%. †
Peter Harmer chief executive officer at Aon UK said: “In order to protect our business in challenging conditions and to ensure we emerge from the recession strong and successful, no stone is being left unturned during 2009 to drive out further cost and to achieve greater efficiencies. The increasing cost of pension provision is one of those costs.
“Our proposal involves moving to a lower standard employer contribution, but supporting this with an offer to match contributions up to a certain level, depending upon an employee’s age group. Put simply, the more an employee contributes, the more Aon will match, up to specified levels.
“This approach recognises that employees want to retain their pay to allow them to make choices. By offering a lower standard contribution while offering matched contributions, we are seeking to reduce fixed costs whilst saying to employees who regard saving into a pension as a priority: ‘If your retirement provision is important to you and you are prepared to invest in it, then we will back you and investing it, too’.”
Aon has †a communications programme designed to support our employees, which includes workshops across the country and a helpline.†