Assessing the assessment

Aon Hewitt has launched an online "Settlement Readiness Assessment", open to all UK defined benefit pension schemes.

It is a very useful assessment to take as a reality check of the state of scheme management.

The questions deal with Scheme size, an understanding of the Financial and Investment Impact, Decision making powers etc.

Some of the questions deal with whether longevity analysis has been done on the scheme membership, record keeping, benefit projection studies, pension structure with linkages to CPI, tiered insurance of the scheme benefits, and % of pensioners which throw light on the costing parameters.

In particular I was interested on  insuring different elements of the scheme’s benefits (eg. older pensioners vs younger, fixed vs indexed pensions, different member categories, a percentage of all pensioners). This would be an interesting area of pricing trade-offs. It certainly removes any cross-subsidization from an Insurer's perspective while making any such selective hiving off costlier for the scheme sponsors.

You can look up on the internet for this assessment by Aon Hewitt.