Escrow whitepaper

This paper summarises Aon's research into the use and effectiveness of escrows within the wider context of Pensions Stability and how pension schemes' concerns over surplus can be addressed.

Concerns around surplus - and specifically the idea of a trapped surplus - may seem a dim and distant issue for many employers, but the modelling we have undertaken shows that it is an issue that may need to be addressed today as pension schemes become better funded and get closer to their desired long term solution.

In this paper we explore:

• Why trapped surpluses are an important consideration today.
• The likelihood of trapped surpluses occurring in future.
• How an escrow can work as a buffer to aid pensions stability.
• When an escrow is likely to be particularly effective.
• The practical implementation issues of escrows.

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