DESCRIPTION OF FREEZE: Freeze for New Employees. Since Jan. 1, 2004, the defined benefit plan has been closed to new hires in the U.S.
PLAN SOLVENCY: At year end 2003, defined benefit pension assets were $950 million and pension obligations were $1.06 billion.
REPORTED FINANCIAL IMPLICATION: The financial impact of the freeze is not public information.
NEW ARRANGEMENTS FOR EMPLOYEES: All employees hired in the U.S. as of Jan. 1, 2004, have been enrolled in a new defined contribution plan that complements an existing 401(k) plan. The plan works as follows: •employees who have completed 1,000 hours of service in a calendar year, and are employed by Aon at year end, are entitled to a company contribution for the year.
•The contribution depends on eligible compensation and years of service. For employees with zero to four years of service, 3% of their compensation is contributed by Aon; five to nine years: 4%; 10 to 19 years: 5%; 20 to 29 years: 6%; and 30-plus years: 7%.
•After five years of service, employees are 100% vested in regards to company contributions.
BACKGROUND: Aon is the world's second largest insurance brokerage and consulting firm and the leading reinsurance broker. The company has three main divisions: consulting services, consumer insurance underwriting and commercial brokerage.
All "Pension Freeze Fact Sheets" posted were created by the Center for Retirement Research at Boston College, which is solely responsible for the research, findings and all materials contained therein. Pensions & Investments has not verified or edited the materials (other than for length and style) and does not necessarily agree or disagree with the analysis and positions expressed by the authors. Reference to any company, product or service does not imply recommendation or sponsorship by Pensions & Investments.