Pension Corporation

62% of UK occupational pension fund trustees believe they should be paid due to the ever-increasing pensions expertise they are now required to have, according to one of the largest independent studies yet conducted.

The study covered 243 respondents - 142 lay trustees and 101 consultants, pension managers and independent trustees. 64% of the respondents represent UK defined benefit pension schemes with at least £100m in assets under management. Aggregate assets under management for all respondents are approximately £50 billion.

The “increasing pensions expertise required” was cited by 55% of respondents as the reason why trustees should be paid, with 17% claiming it was due to the “significant level of responsibility”, and 14% citing the “amount of unrecognised time spent”.

The study, which ran from January to March 2010, was carried out with the readers of Engaged Investor, the trustee magazine, in association with Pension Corporation, the leading provider of risk management solutions to defined benefit pension funds.

The Pensions Regulator’s “Trustee Knowledge & Understanding” guidance outlines the knowledge levels required of occupational pension fund trustees. The full version of the document lists 13 distinct areas of knowledge and 94 specific knowledge requirements.

In a similar study conducted by Engaged Investor magazine of its readers in February 2006, only 50% of respondents believed trustees should be paid.

“There is little doubt that trustees have become expected to understand pensions much more intimately in the last few years, mostly due to the requirements of the Pensions Regulator but also due to the development of the marketplace,” said Engaged Investor Editor Bob Campion. “It is about time this responsibility was recognised financially.”

David Collinson, head of origination, Pension Corporation, said: “Trustees have undoubtedly had an increasing series of responsibilities placed on them over the past few years, not least the obligation to understand all the de-risking options open to them. It is also vital for them to understand how these options might work, a significant additional area of complexity.”

“As professional trustees have become more commonplace on trustee boards, lay trustees feel they should be financially compensated for their increasing expertise; particularly in areas such as investment and actuarial valuations,” added Bob Campion. “The counter argument is typically that trustees should volunteer for the right reasons – not because they want the money. The other question is; who would pay them?”

For further information:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Keren Perrott
+44 (0)20 7269 7218

Engaged Investor
Bob Campion
+44 (0)20 7618 3485
+44 (0)7960 773039
bob.campion@nqsm.com

About the “Future of Pension Schemes” Trustee Survey

The study was conducted by readers of Engaged Investor’s magazine and website between January and March 2010. 243 lay trustees, consultants, pension managers and independent trustees took part. 58% were lay trustees, 17% pension managers, 15% professional consultants or independent trustees. 64% of respondents represent UK pension schemes with at least £100m in assets. Aggregated assets under management of all respondents was approximately £50bn.

More details of the survey will be released shortly.

About Engaged Investor

Engaged Investor The Trustee Magazine, is the only magazine and website dedicated to the UK’s army of occupational pension fund trustees. Launched in 2004, the magazine has a readership of 8,100 pension trustees and 2,000 pension professionals. Engaged Investor runs two free conferences for trustees each year and holds the UK’s only Trustee Awards in July. www.engagedinvestor.co.uk

About Pension Corporation

Pension Corporation is a leading provider of risk management solutions to the trustees and sponsors of defined benefit pension funds. It oversees pension fund liabilities of c.£6 billion and is affiliated to more than 100,000 pension scheme members or former members. Its FSA authorised and regulated insurance company, Pension Insurance Corporation (“PIC”), brings safety and security to scheme members’ benefits through innovative, tailored solutions. These include pension insurance buyout or buy-in and longevity risk management. It has transacted both the UK’s largest and the first public sector backed pension insurance buyouts. Other clients include FTSE 100 companies and several multinationals. PIC is proud to work with pension fund trustees to maximise member benefits. For further information please visit www.pensioncorporation.com

The effective doubling of long-dated real gilt yields from ½% over inflation to 1% over the last three months has brought down UK pension scheme liabilities. Trustees will have accordingly seen deficits narrow by over £30 billion, according to Pension Corporation’s Q1 2010 Pension Risk Transfer Index, published today.

Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, estimates that every ½% rise in real gilt yields could lower liabilities by 7%. For those pension funds with valuations due in March 2010, and their sponsors, this may be good news. However, volatility remains and this trend may prove short-lived.

In contrast, those pension schemes with deficits based on valuations made at 31 March 2009, undoubtedly the worst time for valuations given the crash in asset values, will have difficult discussions with their sponsors regarding funding plans. They will also have to consider the strength of the corporate covenant against the requirement to close the deficit.

The forthcoming financial reporting season will be critical in this regard, as there can be a large gap between the liability that companies report in their accounts and the liability they are committed to funding. At times this gap can become so big as to make IAS 19 very unreliable as a basis for assessment of the company’s commitments.

In the public sector, local authorities will be constrained from passing on increased pension costs to the taxpayer, so may look to transfer risk in different ways.

Pension Corporation’s projection for the size of the pension risk transfer market during 2010 is £15–£20 billion, including a significant amount of longevity risk transfer. Insurance buy-ins and longevity insurance will be seen increasingly as an asset class by pension fund trustees.

David Collinson, partner at Pension Corporation, commented:

“The Lehman Brothers bankruptcy really brought home to many market participants the risks to which their investments were exposed. For the first time since then demand for risk transfer solutions increasingly matches affordability, primarily for partial solutions. We can therefore expect to see an increase in demand for pension risk transfer solutions during 2010.”

Notes to Editors:

For further information please contact:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Nick Henderson
+44 (0)20 7269 7114

Keren Perrott
+44 (0)20 7269 7218

About Pension Corporation

Pension Corporation is a leading provider of risk management solutions to the trustees and sponsors of defined benefit pension funds. Its FSA authorised and regulated insurance company, Pension Insurance Corporation (“PIC”), brings safety and security to scheme members’ benefits through innovative, tailored solutions. PIC has over £3bn in assets under management and has insured c.50,000 pension fund members. Its solutions include pension insurance buyout or buy-in and longevity risk management. It has transacted both the UK’s largest and the first public sector backed pension insurance buyouts. Other clients include FTSE 100 companies and several multinationals. PIC is proud to work with pension fund trustees to maximise member benefits. For further information please visit www.pensioncorporation.com

Aggregate Industries Limited (“the Company”) today announces that its two largest pension schemes have entered into insurance transactions to transfer risk to Pension Insurance Corporation (“PIC”), a leading provider of risk management solutions to defined benefit pension funds.

The two transactions are as follows:

A circa £210m insurance policy purchased by the Aggregate Industries Pension Plan to meet all future payments for pensions in payment as at 30th April 2009.
A circa £95m insurance policy purchased by the Foster Yeoman Retirement Plan 2000 to insure the benefits for all members. It is expected that in due course the Plan will be wound up removing any further obligation on the Company.

Lane Clark & Peacock LLP acted as lead adviser to the Company and the Trustees of the two pension schemes on the transactions.

Ian McGown, Head of Pensions and Benefits at Aggregate Industries, said:

“These transactions follow a wide-ranging review of the pension risks underwritten by Aggregate Industries and the options available to address them.

We are extremely pleased to have completed two complex transactions simultaneously and in such a short period. Pension Insurance Corporation's tailored solutions and competitive financial propositions ensured they were selected ahead of several other insurers.

These transactions were made possible by close co-operation between the Company, Trustees and professional advisers, working towards agreed objectives. It involved a thorough selection, due diligence and negotiation process, leading to commercial terms which made the transactions attractive to both the Company and the Trustee. The transactions bring further increased security to members’ benefits for the long-term.”

Michael Berg, Partner at Lane Clark & Peacock LLP, said:

“We are delighted to have advised Aggregate Industries and the Trustees of both pension schemes and helped them achieve a fundamental reduction in the levels of pension risk.

Setting up a framework for monitoring de-risking opportunities allowed the schemes to move quickly once market conditions had improved, and to lock in to favourable pricing.

We are working with a number of pension schemes and companies to explore de-risking transactions and expect 2010 to be a very successful year for the pensions risk transfer market.”

John Coomber, Chief Executive, Pension Insurance Corporation, commented:

“I am delighted that we have been able to help the Trustees and sponsor bring security to the pension schemes’ members’ benefits in what was a complex transaction. The Trustees’ ability to move quickly, with the key support of LCP and the sponsor, was of critical importance in transferring risk, given recent volatility in the markets.

Pension Insurance Corporation has had a strong start to the year, building on our leading market share for 2009, and I believe that 2010 will be a significant year for pension risk transfer transactions.”

For further information, please contact:

Lane Clark & Peacock LLP
Mark Roberts
+44 (0)20 7432 3096

Aggregate Industries Limited
Chris Higgs
+44 (0)1530 816671

Pension Insurance Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Notes to editors:

Aggregate Industries

Aggregate Industries is a leading player in the construction industry, committed to creating a better built environment. The company produces and supplies a wide range of construction materials including aggregates, asphalt, ready mixed concrete and pre-cast concrete products. It also imports and supplies cementitious materials and offers a national road surfacing and contracting service.

Aggregate Industries’ expertise, capability and solutions-focused approach have made it the preferred partner on some of the UK’s largest construction projects. The company is a pioneer of best practice in sustainability. It was the first company to be certificated to BES 6001, The Framework Standard for the Responsible Sourcing of Construction Products, developed by the BRE (Building Research Establishment) and a founding member of the UK Green Building Council.

Aggregate Industries operates across the UK, Channel Islands and northern Europe, and is a member of the Holcim Group. For further information, please visit www.aggregate.com

Lane Clark & Peacock

Lane Clark & Peacock LLP (LCP) is one of the leading firms of consulting actuaries in Europe, with a wide range of clients including some of the largest global multinationals as well as a number of private equity houses, charities and unions.

Over the last three years, LCP has taken a lead-advisory role on 14 significant buy-in and buyout transactions.

The firm currently has 84 partners and over 500 staff based in offices in London, Winchester, Jersey, Brussels, Zurich, Basel, Utrecht and Dublin. For more information on LCP please visit www.lcp.uk.com

LCP is part of the Alexander Forbes group of companies which employs over 4,000 people internationally. For more information on Alexander Forbes and its insurance, risk and financial services, please visit the website at www.alexanderforbes.com

Pension Corporation

Pension Corporation (“PC”), a leading provider of risk management solutions to defined benefit pension funds, is pleased to announce excellent preliminary results for the 12 month period ended 31 December 2009, despite the difficult financial and economic environment. Significant strides have been made in establishing the company as a trusted risk manager, helping pension fund trustees and sponsors to remove risk to the benefit of members.

2009 Pension Insurance Corporation Highlights

Attains leadership of the bulk pension insurance market - new pension insurance business of £1.1 billion transacted
Embedded Value of £618 million as at 31 December 2009 – up 50% over the year
Embedded Value earnings in the year ended 31 December 2009 of £202 million
Strong and conservatively managed balance sheet with PIC’s regulatory capital ratio standing at 178% of the required minimum
£3.3 billion in assets under management and around 45,000 pension fund members insured

Sir Mark Weinberg, Group Chairman commented: “I am delighted that 2009 was a very successful year for the business. Pension Insurance Corporation was able to win some very significant transactions when faced with strong competition from the legacy players. I believe that pension fund trustees are coming to see us as the market leader and the value of this cannot be underestimated.

“Our ability to tailor transactions to meet trustee and corporate needs has enabled us to increase our market share to in excess of 25% (estimated).

“We expect to see the market continue to grow with up to £20 billion of pension risk transferred during the current year. There may also be opportunities for Pension Corporation’s growth arising out of market consolidation or the sale of annuity books by other insurers.”

During 2009, PIC wrote a total of eight transactions and has now completed 17 in total. These included the buyout of Food from Britain, which was the first insurance transaction for a public sector backed pension scheme.

Leyland DAF was also significant as PIC is working with the trustees to assess the level of surplus and consider how best it can be used by the scheme members, including the amount of any benefit improvements.

During the latter half of the year, PIC worked with FTSE 100 companies including Cadbury and Liberty, several multi-national companies including Denso, and private equity owned companies, such as Warwick, to manage pensions related issues.

Pension Corporation Investments

Despite the challenging economic environment, our two operational businesses, telent and Quadriga, continued to perform well and are taking market share. telent is the former GEC Marconi and Quadriga is Europe’s largest hotel entertainment supplier. The companies made a combined EBITDA of £62 million in the year to March 2009, a strong operational performance. telent recently announced it was part of a consortium winning a £1.4 billion contract to manage BT’s Openreach network. Quadriga launched a major new product for its hotel customers, Sensiq – the most powerful guest communications portal available – which we believe will lead to increased market share.

Thought Leadership Programme

Pension Corporation’s Thought Leadership programme, which is committed to facilitating a debate around both public and private sector pensions, published a number of white papers focussing on the impact of the economic crisis on the pensions landscape.

Notes to Editors:

For further information please contact:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Nick Henderson
+44 (0)20 7269 7114

The year end solvency ratio is the amount of Available Capital Resources above the Required Capital
The figures provided are preliminary and are to be audited

About Pension Corporation

Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that Pension Insurance Corporation is to insure the Liberty International Group Retirement Benefit Scheme.

In return for fully insuring the liabilities of the Scheme, Pension Insurance Corporation will receive assets amounting to £61 million, comprising £46 million in Scheme assets and £15 million additional company contribution. The Scheme has 203 members.

Liberty International PLC is one of the UK’s largest listed property companies and a constituent of the FTSE 100 Index of the UK’s leading listed companies. At 30 June 2009, adjusted, diluted shareholders’ funds amounted to £2.6 billion and Liberty International owned £6.1 billion of properties; UK regional shopping centres comprised 73 per cent and retail property in aggregate 86 per cent. Liberty International converted into a UK Real Estate Investment Trust (REIT) on 1 January 2007.

David Bramson, Chairman of the Scheme Trustees, said:

“Pension Insurance Corporation offers a strong proposition in securing member benefits for the long term. I am very pleased that we were able to conclude the transaction with PIC. The PIC team was very helpful and constructive in negotiations, helping us to achieve the best overall result for our members.”

Akash Rooprai, a Principal at Mercer, said:

“In its role as lead adviser and broker for this transaction, Mercer helped the trustees to explore a range of potential solutions. PIC’s flexible approach and efficient execution helped them win this contract.”

John Coomber, Chief Executive, Pension Insurance Corporation, commented:

“We are delighted to have been able to help Liberty International and its pension fund trustees bring security to the benefits of its members. Liberty deserves credit for using corporate resources to help achieve this. This is the second FTSE 100 risk transfer transaction which PIC has completed and I look forward to further transactions during 2010.”

For further information:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Nick Henderson
+44 (0)20 7269 7114

About Pension Corporation

The Life and Longevity Markets Association (‘LLMA’) announces its launch today.

The LLMA has been formed to promote the development of a liquid traded market in longevity and mortality-related risk, of the type that exists for Insurance Linked Securities (ILS), and other large trend risks like interest rates and inflation. The association will support the development of consistent standards, methodologies and benchmarks to help build a liquid trading market, necessary to support the future demand for longevity protection sought by insurers and pension funds.

The LLMA has been established by AXA, Deutsche Bank, J.P. Morgan, Legal & General, Pension Corporation, Prudential, RBS and Swiss Re.

“In the UK alone the total pension liabilities of all parties exceed £2 trillion. When one considers the size of the worldwide market it becomes clear that all parties would benefit from the development of a liquid traded market in life and longevity risks.”

John Fitzpatrick, a Director of the LLMA said: “The launch of the LLMA brings together a number of parties to create marketwide standards suitable to promote a liquid traded market. Longevity risk is starting to move to pension insurers and reinsurers in significant volumes but much more is likely in the future from pension funds anxious to control their future liabilities. The LLMA’s work will bring benefits to capital markets investors enabling their investment and trading through the growth of a new and uncorrelated asset class. Insurers and reinsurers will benefit by bringing standardised structures to what is today a private, bespoke market. Pension Funds and others with significant financial risk from longevity will benefit from the increased capacity a standardised market will create. Such a marketplace would permit new and flexible solutions for those with longevity and mortality exposures. Increased capacity will also allow pension funds and others to help achieve their objective to secure their members’ benefits for the long term sooner than would otherwise be the case. This development would go a long way to promote a much-needed stability in retirement systems.”

“Increasing numbers of pension funds will seek to stabilise their liabilities through longevity insurance and swaps. As the baby boomers retire and longevity expectations continue to increase across the developed world at historically high rates against largely fixed retirement / entitlement dates demand will rise for ways to protect against this growing financial risk. The development of longevity trading will help to address the future expected demand in the market and allow more and more pension funds to secure their members’ benefits for the future.”

“To date almost all longevity capacity has been provided by the insurance and reinsurance markets. However, given the vast size of global pension liabilities, it is clear that there will be insufficient capacity in these markets to absorb the risks. It is our belief that the capital markets will have an appetite for assets like these that are not correlated with market or credit risks, and hence we have set up the LLMA to facilitate the evolution of the market.”

NOTES: Factfile on the LLMA

Objective
The objective of the Association is to provide a forum for market participants to collaborate with a view to articulating criteria for, and assisting in the establishment of, suitable and consistent standards, conventions and best practices to promote liquidity in the trading of financial instruments that reference longevity and mortality related risks as well as consistency of relevant demographic data

Benefits
Benefits that will be delivered by the Association include improved transparency due to the development of standard indices for longevity, standard financial products linked to longevity and standard methodologies for valuing products.

Scope
The primary focus of the LLMA is pension-related longevity and mortality, rather than life settlements. In the short term the LLMA will be primarily focused on the UK market for longevity and mortality, but may later expand its horizons to other countries.

The focus of the Initiative is exclusively on macro-life related longevity and mortality risk and not on microlife (i.e. Life Settlements)

Participation
Current members of the LLMA are AXA, Deutsche Bank, J.P. Morgan, Legal & General, Pension Corporation, Prudential, RBS and Swiss Re.

The consortium is not a commercial or for-profit venture and it is the intention that any IP developed by the consortium will be made available for use by all market participants

Planned output
The LLMA plans to set standards for the new trading market it wish to promote. These are likely to include:

Templates for standardised longevity products
A longevity trading index
Standardised Valuation model for longevity

Contacts
For more information, please contact
Victoria Sisson, FWD PR
Victoria.sisson@fwdpr.co.uk
020 7623 2368

About the LLMA
The Life and Longevity Markets Association (‘LLMA’) is a non-profit organisation founded and funded by current members: AXA, Deutsche Bank, J.P. Morgan, Legal & General, Pension Corporation, Prudential, RBS and Swiss Re. It aims to promote the development of a liquid traded market in longevity and mortality-related risk. The association supports the development of consistent standards, methodologies and benchmarks to help build a liquid trading market, of the type that exists for Insurance Linked Securities (ILS), and other large trend risks like interest rate and inflation.

Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that Pension Insurance Corporation has insured the Inchcape Shipping Services Pension Scheme (“ISS”). ISS is the world’s leading marine services provider.

Pension Insurance Corporation was selected by the trustees on the flexibility of its offering and ability to transact promptly. The pension insurance buyout is for £15 million of liabilities and relates to the entire scheme.

In a little over a year, Pension Insurance Corporation has completed the UK’s largest ever pension insurance buyout (the Thorn £1.1billion pension insurance buyout), the first ever public sector backed transaction with the former DEFRA sponsored body, Food From Britain, and a £500m pension insurance buy-in with the Cadbury Pension Fund, amongst other transactions.

Pension Corporation has achieved a leading market share by offering innovative, tailored solutions which match client requirements. It oversees pension fund liabilities of c.£6 billion and is affiliated to more than 100,000 pension scheme members or former members.

John Horrocks, Chairman of the ISS Trustees, said:

“We are very pleased to have completed this pension insurance buyout with PIC. The ongoing security of our members’ pensions is of the utmost importance to us as Trustees and we believe that PIC will provide that security for the longterm.”

Matt Barnes at Pension Insurance Corporation, commented:

“We are delighted to have been able to help the Trustees of the Inchcape Shipping Services Pension Scheme achieve their goals of securing members’ benefits. In what has been a difficult 12 months for many sponsors and pension schemes alike, we have tailored a number of innovative solutions which match the needs of trustees and scheme members and we look forward to providing further groundbreaking solutions to meet client needs during 2010.”

For further information:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Nick Henderson
+44 (0)20 7269 7114

About Pension Corporation

Pension Corporation assists the trustees and sponsors of defined benefit pension funds in removing risk from pension liabilities. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance and asset-liability management. It offers increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com

About Inchcape Shipping Services

Inchcape Shipping Services is the world’s leading marine services provider. Through its proprietary network of some 245 offices employing over 3,800 people across 63 countries, ISS provides its customers with an unparalleled global resource delivered locally and tailored to each customer’s individual needs. Its diversified customer base includes clients across the oil, cruise, container and bulk commodity sectors as well as serving naval, government and inter-governmental clients. Additionally, ISS provides landside commercial and humanitarian logistics, transit, offshore support and other associated marine services. The Company now also provides a growing range of outsourcing services. These include global crew and marine spares logistics; port agency management and commercial representation; and sophisticated Enterprise Resource Planning solutions through its subsidiary ShipNet.

The lack of adequate preparation for the baby boomers and the highest ever level of youth unemployment risk perpetuating the current pensions crisis for at least the next two generations, according to a new paper published by Pension Corporation, which concludes that while the economic crisis and ensuing recession may now be coming to an end, the crisis in pensions continues unabated.

Looking at the impact of the credit crunch and its aftermath on pension provision in the UK, the Study, authored by Dr. Amarendra Swarup and Dr. Frank Eich, is an update of an earlier Study from June 2009. Conducted at the height of the recession, this Study concluded that the crisis had impacted on all aspects of the British pension system and would leave a lasting legacy.

“Back to the drawing board: The economic crisis and its implications for pension provision in the United Kingdom – an update” assesses where the UK pensions system stands at the end of 2009:

The asset price recovery and the improving economic outlook is not mirrored by a recovery in the prospects for the UK pension system
Defined-benefit pension schemes continue to struggle, with only anaemic improvements in their aggregate funding position despite the strong rally in assets over 2009, and are closing down at an increasingly rapid rate
The rise in the value of assets in defined-contribution schemes, whilst welcome, illustrates the volatility and the burden of the future risk placed on the individual
Alongside the consequences of the current crisis, society also has to prepare for the economic and fiscal consequences of population ageing, married to the retirement of the baby boomers
With youth unemployment rising to its highest ever, there is the risk that an entire cohort could start their working lives with a broken employment record, making it difficult for them to build up adequate pension entitlements or other forms of long-term savings
With little evidence of individuals planning for retirement, the likelihood remains that a large percentage of future pensioners will be disappointed by their retirement income
Meanwhile, the public finance outlook remains bleak and the future fiscal tightening required will depress disposable income growth for years to come and leave the government in a weak position to deal with the above challenges

Pension Corporation is committed to helping facilitate a debate around pensions, through its own published studies and research, sponsorship of other reports, the Pensions Tomorrow initiative at the London School of Economics and other projects.

The Trustees of the Cadbury Pension Fund have agreed a pension insurance buy-in agreement, to insure a part of their pensioner liabilities with Pension Insurance Corporation (“PIC”). The liabilities being insured are valued at approximately £500m. The insurance policy will be held as an asset of the Cadbury Pension Fund, matching a proportion of the Fund’s liabilities. This investment is part of the Fund's ongoing programme of reducing risk in the pension fund.

John Coomber, Chief Executive of Pension Insurance Corporation, commented:

“We have been working with the Trustees for over a year in order to meet their requirements with the most appropriate transaction for the Fund. We are very pleased to have been able to help the Trustees achieve this important step in securing pensioner benefits.”

Aon Consulting acted for the Fund in the placement of this insurance.

For further information please contact:

David Skapinker
T: 020 7505 7478
M: 0750 553 6436
david.skapinker@aon.co.uk

Notes to Editors

Pension insurance buy-in
A pension insurance buy-in is an investment by the trustee of a pension plan in a bulk annuity policy provided by an insurer. The bulk annuity relates to specified pensioner members of the plan, and will pay the plan the agreed level of benefits for the lifetime of these members (and potentially that of their dependants). This means that the asset generally matches the plan’s obligation to these members, so removes investment, inflation and longevity risks from the plan in relation to the specified members. Because the policy is held in the name of the plan, however, the trustee retains responsibility for the payments made to members, and typically needs to ensure that there is no preferential treatment as a result of the buy-in in relation to those members specified under the policy.

About Aon Consulting
Aon Consulting Worldwide is among the top global human capital consulting firms, with 2008 revenues of $1.358 billion and more than 6,300 professionals in 117 offices worldwide. Aon Consulting works with organisations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007 and 2008. For more information on Aon, please visit www.aon.mediaroom.com.

About Aon
Aon Corporation (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007, 2008, and 2009, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007, 2008 and 2009 by the readers of Business Insurance. For more information on Aon, log on to http://www.aon.com.

http://aon.mediaroom.com/index.php?s=58.

Safe Harbour Statement: http://aon.mediaroom.com/index.php?s=67

Aon Consulting Limited is authorised and regulated by the Financial Services Authority.

About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. The Group provides increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com.

Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, expects that the final three months of 2009 will be the busiest for pension insurance buyout and buy-ins since Q3 2008, when there was approximately £2 billion of risk transferred.

Pension Corporation’s latest Pension Risk Transfer Index, published today, shows that overall affordability for pension insurance is at its most favourable level since September 2008. Sponsors and trustees are anxious to de-risk their pension funds post the Lehman bankruptcy; and in addition, as credit spreads continue to come in, those schemes invested in gilts and corporate bonds have an impetus to transact as the cost of delay becomes relatively more expensive for them.

High levels of uncertainty around the markets and the economy are leading Trustees to seek to increase the speed of a risk transfer transaction. This trend is being driven by concerns that scheme assets will again reduce in value if there is a second wave of asset price falls; also around future economic policy, including the phasing of quantitative easing and consequential levels of inflation; and the weakening of the corporate covenant should insolvency rates increase.

As well as quicker transaction processes, Trustees are increasingly seeking innovative risk transfer solutions, rather than a straight focus on price, as concerns over market volatility mount. This has manifested itself in Trustees increasingly requesting the immediate transfer of investment risk to the insurer upon signing of exclusivity, rather than on signing of the detailed policy documents.

David Collinson, Partner at Pension Corporation, commented:

“Several key factors in the market are helping to drive sponsors and trustees to offload as much risk as they are able to afford during this quarter. Perhaps the most significant of these is that the overall affordability for schemes is at its most favorable since September 2008, just before Lehman collapsed.

“However, it should be noted that Trustees, whilst keenly interested in price, are now considering other factors when they wish to transact. One of the key innovations which we are increasingly being asked to provide is the immediate transfer of investment risk during the period of exclusivity before contracts are signed.”

Notes to Editors:

For further information please contact:

Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140

Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200

Nick Henderson
+44 (0)20 7269 7114

Caroline Parker
+44 (0)20 7269 7295