Released on: December 4, 2007, 11:40 pm

Press Release Author: Iain Martin

Industry:

Press Release Summary: Almost half of UK companies (49%) feel that the increased
costs of funding their defined benefit (DB) pension scheme has impacted negatively
on the remuneration packages their company is able to offer, with almost the same
number (48%) feeling that this will continue to be the case in the future.

Press Release Body: Almost half of UK companies (49%) feel that the increased costs
of funding their defined benefit (DB) pension scheme has impacted negatively on the
remuneration packages their company is able to offer, with almost the same number
(48%) feeling that this will continue to be the case in the future.

This is according to research released today by Aon Consulting, a leading pension,
benefits and HR consulting firm, who surveyed representatives from the UK's largest
DB schemes about the impact that funding these schemes had on their company's
ability to compete, their share price, the price of goods and services and
remuneration package.

More than one in five companies (22%) also felt that the increasing cost of funding
their DB schemes is impacting negatively on their share price, with a fifth (20%)
anticipating that this will continue to be the case in the future. However, these
figures have decreased significantly since Aon conducted similar research in 2006,
when more than a third of companies (36%) felt that the increased costs of funding
their DB scheme was impacting their share price, rising to 38% when asked if this
would be the case in the future.

Paul McGlone, principal and senior actuary at Aon Consulting, said: "The funding of
defined benefit schemes is still a considerable problem for many UK companies. With
the rising equity markets and the rise in bond yields that we have seen over the
past year, the strain many companies seem to have been under regarding their pension
scheme does appear to have eased slightly."

The research also highlighted a marked relaxation among companies to the impact of
pension funding costs on their competitiveness. Almost a third of companies (31%)
were concerned that the increased cost of funding their DB scheme is already
negatively affecting their ability to compete effectively (compared to 50% in 2006).
This rose to 36% when asked if their projected pension commitments in the future
would continue to impact negatively on their ability to compete (compared to 58% in
2006).

Rising pension costs associated with DB schemes were also seen to be having an
impact on the price of goods and services, with 30% of companies stating that they
have already had to increase prices. Looking ahead, a third (33%) of those surveyed
forecast that pension costs would continue to increase the upward pressure on the
cost of their goods and services in the future. However, company concerns were
weaker than in the 2006 survey when 40% of companies stated that they had already
had to increase their prices due to rising pension costs and 54% forecasting
continued price increases.

Mr McGlone continued: "Based on the survey results, the message from the employers
seems to be that the cost of pension deficits is most likely to be met by changes to
employee remuneration, with customers being hit second, and shareholders suffering
least from the pension debts. It is logical that companies will take this approach
given that employees are the ones who will benefit from the pension scheme. However
it will still grate with some employees and unions.

"Overall, it is encouraging that company concerns over the negative impacts of
funding defined pension schemes are decreasing. This is probably due to a
combination of factors, including market conditions, additional contributions to
shore up pension deficits, and better risk management techniques being put in place
to reduce the likelihood of similar issues occurring in future."

Notes to editors:

The research surveyed 150 UK companies operating defined benefit pension schemes
between November 2006 and February 2007.

Of the companies surveyed:

* 26.5% operated schemes that were open to new members and accrual
* 59.1% operated schemes that were closed to new members but continued to accrue
benefits
* 14.4% operated schemes that were closed to new members and accrual

About Aon Consulting

Aon Consulting is a leading human capital consultancy, helping organisations of
every size to attract and keep the employees they need. We advise on all aspects of
employment, including health-related insurance and risk; employee compensation and
pensions; human resource strategy planning; job design and change management; and
staff assessment and legal issues. Aon Consulting is a division of Aon, one of the
UK's largest insurance brokers and providers of risk management services and a major
force in reinsurance and the UK human capital consulting market. Aon Consulting
Limited is authorised and regulated by the Financial Services Authority.builder\'s
insurance

Aon UK is ranked by A.M. Best as the number one global insurance brokerage based on
brokerage revenues and voted best insurance intermediary, offering classic car
insurance, high value home insurance, entertainment and media liability insurance
and builder\'s
insurance.


Web Site:
http://www.commercialservices.aon.co.uk/commercialservices/microsites/construction/


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