Aon Hewitt has launched an implemented annuities business, which will combine its fiduciary management services with full or partial pension de-risking.
The global investment consultant’s move follows the announcement by insurer Legal & General this month that it had launched a similar service to transition clients from its investment arm’s funds to a buyout.
“For many pension schemes, the ultimate objective is the use of a bulk annuity to secure benefits with an insurer,” said Martin Bird, senior partner and head of risk settlement at Aon Hewitt. “For many too, fiduciary investment management through delegated consulting services is the right solution for optimizing their risk/return balance in an efficient governance structure.”
Aon Hewitt noted various selling points of the new set-up, including custom annuity price tracking for each scheme, and access to insurers such as Aviva, Legal & General, PIC, and Rothesay Life, with Prudential in formal discussions to join.
The UK buyout market, which took off prior to the financial crisis, has continued to expand in the last few years. Already buyout transaction volumes have surpassed last year’s record £7.5 billion ($12 billion), according to figures from LCP.
This new product is to focus on the UK market, a spokesperson for the firm said, but Aon Hewitt will continue to work with its international buyout clients more broadly.
In the US, the company advised on the largest pension-risk transfers to date: GM and Verizon.
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