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Employee Benefits
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Employee Benefits Employee Benefits
Defined Contribution Savings Plans
Aon maintains defined contribution savings plans for the benefit of its employees. The expense recognized for these plans is included in Compensation and benefits in the Consolidated Statements of Income. The expense for the significant plans in the U.S., U.K., Netherlands, and Canada is as follows (in millions):
Years ended December 31202020192018
U.S.$87 $98 $98 
U.K.42 41 45 
Netherlands and Canada26 25 25 
Total$155 $164 $168 
Pension and Other Postretirement Benefits
The Company sponsors defined benefit pension and postretirement health and welfare plans that provide retirement, medical, and life insurance benefits. The postretirement health care plans are contributory, with retiree contributions adjusted annually, and the life insurance and pension plans are generally noncontributory. The significant U.S., U.K., Netherlands, and Canada pension plans are closed to new entrants.
Pension Plans
The following tables provide a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended December 31, 2020 and 2019, and a statement of the funded status as of December 31, 2020 and 2019, for Aon’s significant U.K., U.S., and other major pension plans, which are located in the Netherlands and Canada. These plans represent approximately 91% of the Company’s projected benefit obligations.
 U.K.U.S.Other
(millions)202020192020201920202019
Change in projected benefit obligation    
At January 1$4,779 $4,129 $3,192 $2,877 $1,425 $1,271 
Service cost— — — — — — 
Interest cost88 109 85 108 19 27 
Plan amendment3 10 — — — — 
Settlements(7)(22)— — — — 
Actuarial loss (gain)520 594 274 373 112 177 
Benefit payments(209)(168)(171)(166)(44)(42)
Foreign currency impact232 127 — — 113 (8)
As of December 31$5,406 $4,779 $3,380 $3,192 $1,625 $1,425 
Accumulated benefit obligation at end of year$5,406 $4,779 $3,380 $3,192 $1,592 $1,391 
Change in fair value of plan assets   
At January 1$5,959 $5,225 $2,066 $1,796 $1,303 $1,155 
Actual return on plan assets618 687 289 398 109 182 
Employer contributions8 78 92 38 20 19 
Settlements(7)(22)— — — — 
Benefit payments(209)(168)(171)(166)(44)(42)
Foreign currency impact283 159 — — 109 (11)
As of December 31$6,652 $5,959 $2,276 $2,066 $1,497 $1,303 
Market related value at end of year$6,652 $5,959 $2,076 $1,969 $1,497 $1,303 
Amount recognized in Statement of Financial Position as of December 31   
Funded status$1,246 $1,180 $(1,104)$(1,126)$(128)$(122)
Unrecognized prior-service cost43 40 — 1 (7)(6)
Unrecognized loss1,286 1,204 1,812 1,762 521 460 
Net amount recognized$2,575 $2,424 $708 $637 $386 $332 
During 2020 and 2019, the net actuarial losses increased the benefit obligation primarily due to the decrease in discount rates.
In November 2020, the Company entered into an insurance contract that covers a portion of the assets within a select U.K. pension scheme. The transaction resulted in a decrease in Prepaid pension assets and Accumulated other comprehensive income of $94 million.
Amounts recognized in the Consolidated Statements of Financial Position consist of (in millions):
 U.K.U.S.Other
 202020192020201920202019
Prepaid benefit cost (1)
$1,268 $1,200 $— $— $— $— 
Accrued benefit liability - current (2)
(1)(1)(52)(50)(5)(5)
Accrued benefit liability - non-current (3)
(21)(19)(1,052)(1,076)(123)(117)
Accumulated other comprehensive loss 1,329 1,244 1,812 1,763 514 454 
Net amount recognized$2,575 $2,424 $708 $637 $386 $332 
(1)Included in Prepaid pension
(2)Included in Other current liabilities
(3)Included in Pension, other postretirement, and postemployment liabilities
Amounts recognized in Accumulated other comprehensive loss (income) that have not yet been recognized as components of net periodic benefit cost at December 31, 2020 and 2019 consist of (in millions):
 U.K.U.S.Other
 202020192020201920202019
Net loss$1,286 $1,204 $1,812 $1,762 $521 $460 
Prior service cost (income)43 40 — 1 (7)(6)
Total$1,329 $1,244 $1,812 $1,763 $514 $454 
In 2020, U.S. plans with a projected benefit obligation (“PBO”) and an accumulated benefit obligation (“ABO”) in excess of the fair value of plan assets had a PBO of $3.3 billion, an ABO of $3.3 billion, and plan assets with a fair value of $2.2 billion. U.K. plans with a PBO and an ABO in excess of the fair value of plan assets had a PBO of $54 million, an ABO of $54 million and plan assets with a fair value of $32 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.6 billion and plan assets with a fair value of $1.4 billion, and other plans with an ABO in excess of the fair value of plan assets had an ABO of $443 million and plan assets with a fair value of $342 million.

In 2019, U.S. plans with a PBO and an ABO in excess of the fair value of plan assets had a PBO of $3.1 billion, an ABO of $3.1 billion, and plan assets of $2.0 billion. U.K. plans with a PBO and an ABO in excess of the fair value of plan assets had a PBO of $54 million, an ABO of $54 million and plan assets with a fair value of $34 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.4 billion and plan assets with a fair value of $1.3 billion, and plans with an ABO in excess of the fair value of plan assets had an ABO of $406 million and plan assets with a fair value of $311 million.
Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
 U.K.U.S.Other
 202020192018202020192018202020192018
Service cost$— $— $— $— $— $— $— $— $— 
Interest cost88 109 109 85 108 99 19 27 27 
Expected return on plan assets, net of administration expenses(159)(191)(192)(134)(136)(144)(34)(40)(45)
Amortization of prior-service cost2 1 1 1 2 2 — — — 
Amortization of net actuarial loss30 29 28 68 53 59 12 12 12 
Net periodic benefit (income) cost(39)(52)(54)20 27 16 (3)(1)(6)
Settlement expense2 5 37 — — — — — — 
Total net periodic benefit cost (income)$(37)$(47)$(17)$20 $27 $16 $(3)$(1)$(6)
The Company uses a full-yield curve approach in the estimation of the service and interest cost components of net periodic pension and postretirement benefit cost for its major pension and other postretirement benefit plans. This estimation was obtained by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.
Transfer payments from certain U.K. pension plans exceeded the plan’s service and interest cost in 2020 and 2019. This triggered settlement accounting which required immediate recognition of a portion of the accumulated losses associated with the plan. Consequently, the Company recognized a non-cash settlement charge for approximately £2 million in 2020 ($2 million using December 31, 2020 exchange rates) and approximately £4 million in 2019 ($5 million using December 31, 2019 exchange rates).
The Company approved a plan to offer a voluntary one-time lump sum payment option to certain eligible employees of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed in 2018. As of December 31, 2018, lump sum payments from plan assets of £139 million ($176 million using December 31, 2018 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the fourth quarter of 2018, which in aggregate resulted in a reduction to the projected benefit obligation of £122 million ($154 million using December 31, 2018 exchange rates) as well as a non-cash settlement charge of £28 million ($37 million using average exchange rates) for the year ended December 31, 2018.
The weighted-average assumptions used to determine benefit obligations are as follows:
 U.K.
U.S. (1)
Other
 202020192020201920202019
Discount rate1.45%2.09%
1.74 - 2.45%
2.72 - 3.17%
0.38 - 2.47%
0.91 - 3.10%
Rate of compensation increase
3.22 - 3.72%
3.24 - 3.74%
N/AN/A
1.00 - 3.00%
1.00 - 3.00%
Underlying price inflation2.12%1.78%N/AN/A2.00%2.00%
(1)U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation.
The weighted-average assumptions used to determine the net periodic benefit cost are as follows:
 U.K.U.S.Other
 202020192018202020192018202020192018
Discount rate1.89%2.95%2.63%
2.36 - 2.76%
3.92 - 4.26%
3.27 - 3.61%
0.74 - 2.90%
1.89 - 3.88%
1.78 - 3.39%
Expected return on plan assets, net of administration expenses2.74%3.64%3.34%
3.30 - 7.04%
7.05%7.71%
2.10 - 3.10%
2.50 - 4.10%
1.70 - 4.85%
Rate of compensation increase
3.24 - 3.74%
3.73 - 4.23%
3.70 - 4.20%
N/AN/AN/A
1.00 - 3.00%
1.00 - 3.00%
1.00 - 3.00%
Expected Return on Plan Assets
To determine the expected long-term rate of return on plan assets, the historical performance, investment community forecasts, and current market conditions are analyzed to develop expected returns for each asset class used by the plans. The expected returns for each asset class are weighted by the target allocations of the plans. The expected return of 7.04% on U.S. plan assets reflects a portfolio that is seeking asset growth through a higher equity allocation while maintaining prudent risk levels. The portfolio contains certain assets that have historically resulted in higher returns, as well as other financial instruments to minimize downside risk.
No plan assets are expected to be returned to the Company during 2021.
Fair value of plan assets
The Company determined the fair value of plan assets through numerous procedures based on the asset class and available information. Refer to Note 15 “Fair Value Measurements and Financial Instruments” for a description of the procedures performed to determine the fair value of the plan assets.
The fair values of the Company’s U.S. pension plan assets at December 31, 2020 and December 31, 2019, by asset category, are as follows (in millions):
  Fair Value Measurements Using
Asset CategoryBalance at December 31, 2020Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$79 $79 $— $— 
Equity investments:  
Equity securities207 207 — — 
Equity derivatives62 — 62 — 
Pooled funds (2)
640 90 — — 
Fixed income investments: 
Corporate bonds167 — 167 — 
Government and agency bonds233 200 33 — 
Pooled funds (2)
543 212 — — 
Other investments: 
Real estate (2) (3)
163 — — — 
Alternative investments (2) (4)
182 — — — 
Total$2,276 $788 $262 $— 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of property funds and trusts holding direct real estate investments.
(4)Consists of limited partnerships, private equity, and hedge funds.
  Fair Value Measurements Using
Asset CategoryBalance at December 31, 2019Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$77 $77 $— $— 
Equity investments:  
Equity securities195 195 — — 
Equity derivatives22 — 22 — 
Pooled funds (2)
583 — — — 
Fixed income investments: 
Corporate bonds128 — 128 — 
Government and agency bonds199 162 37 — 
Asset-backed securities3 — 3 — 
Pooled funds (2)
545 — — — 
Other investments: 
Real estate and REITs (3)
133 — — — 
Alternative investments (2) (4)
181 — — — 
Total$2,066 $434 $190 $— 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of property funds and trusts holding direct real estate investments.
(4)Consists of limited partnerships, private equity, and hedge funds.
The fair values of the Company’s major U.K. pension plan assets at December 31, 2020 and December 31, 2019, by asset category, are as follows (in millions):
  Fair Value Measurements Using
 Balance at December 31, 2020Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$182 $182 $— $— 
Equity investments: 
Pooled funds (2)
4 — — — 
Fixed income investments: 
Derivatives (3)
(1,424)— (1,424)— 
Corporate bonds4 4 
Government and agency bonds2,872 2,872 — — 
Annuities2,625 — — 2,625 
Pooled funds (2)
875 — — — 
Other investments:
Real estate (2) (4)
117— — — 
Pooled funds (2) (5)
1,397 4 — — 
Total$6,652 $3,062 $(1,424)$2,625 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of equity securities and equity derivatives, including repurchase agreements.
(4)Consists of property funds and trusts holding direct real estate investments.
(5)Consists of multi-strategy limited partnerships, private equity, hedge funds, and collective investment schemes with a diversified portfolio of cash, equities, equity related securities, derivatives, and/or fixed income securities.
  Fair Value Measurements Using
 Balance at December 31, 2019Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$81 $81 $— $— 
Equity investments: 
Pooled funds (2)
119 — — — 
Fixed income investments: 
Derivatives (3)
(1,205)— (1,205)— 
Government and agency bonds2,667 2,667 — — 
Annuities1,849 — — 1,849 
Pooled funds (2)
1,486 — — — 
Other investments: 
Real estate (2) (4)
180 — — — 
Pooled funds (2) (5)
782 — — — 
Total$5,959 $2,748 $(1,205)$1,849 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of equity securities and equity derivatives, including repurchase agreements.
(4)Consists of property funds and trusts holding direct real estate investments.
(5)Consists of multi-strategy limited partnerships, private equity, hedge funds, and collective investment schemes with a diversified portfolio of cash, equities, equity related securities, derivatives, and/or fixed income securities.

The following table presents the changes in the Level 3 fair-value category in the Company’s U.K. pension plans for the years ended December 31, 2020 and December 31, 2019 (in millions):
Fair Value Measurements Using Level 3 InputsAnnuities
Balance at January 1, 2019$1,688 
Actual return on plan assets:
Relating to assets still held at December 31, 2019113 
Foreign exchange48 
Balance at December 31, 20191,849 
Actual return on plan assets:
Relating to assets still held at December 31, 202013 
Purchases, sales and settlements-net682 
Foreign exchange81 
Balance at December 31, 2020$2,625 
The fair values of the Company’s other major pension plan assets at December 31, 2020 and December 31, 2019, by asset category, are as follows (in millions):
  Fair Value Measurements Using
 Balance at December 31, 2020Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$37 $37 $— $— 
Equity investments: 
Equity securities75 75 — — 
Pooled funds (2)
290 — — — 
Fixed income investments: 
Government and agency bonds395 395 — — 
Pooled funds (2)
627 — — — 
Other investments: 
Alternative investments (2) (3)
63 — — — 
Real estate (2) (4)
10 — — — 
Total$1,497 $507 $— $— 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of limited partnerships, private equity, and hedge funds.
(4)Consists of property funds and trusts holding direct real estate investments.
  Fair Value Measurements Using
 Balance at December 31, 2019Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$5 $5 $— $— 
Equity investments: 
Pooled funds (2)
323 — — — 
Fixed income investments: 
Pooled funds (2)
907 — — — 
Other investments: 
Alternative investments (2) (3)
62 — — — 
Real estate (2) (4)
6 — — — 
Total $1,303 $5 $— $— 
(1)Consists of cash and institutional short-term investment funds.
(2)Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)Consists of limited partnerships, private equity, and hedge funds.
(4)Consists of property funds and trusts holding direct real estate investments.
Investment Policy and Strategy
The U.S. investment policy, as established by the Aon Retirement Plan Governance and Investment Committee (“RPGIC”), seeks reasonable asset growth at prudent risk levels within weighted average target allocations. At December 31, 2020, the weighted average targeted allocation for the U.S. plans was 35% for equity investments, 30% for fixed income investments, and 35% for other investments. Aon believes that plan assets are well-diversified and are of appropriate quality. The investment portfolio asset allocation is reviewed quarterly and re-balanced to be within policy target allocations. The investment policy is reviewed at least annually and revised, as deemed appropriate by the RPGIC. The investment policies for international plans are generally established by the local pension plan trustees and seek to maintain the plans’ ability to meet liabilities and to comply with local minimum funding requirements. Plan assets are invested in diversified portfolios that provide adequate levels of return at an acceptable level of risk. The investment policies are reviewed at least annually and revised, as deemed appropriate
to ensure that the objectives are being met. At December 31, 2020, the weighted average targeted allocation for the U.K. and non-U.S. plans was 6% for equity investments, 84% for fixed income investments, and 11% for other investments.
Cash Flows
Contributions
Based on current assumptions, in 2021, the Company expects to contribute approximately $8 million, $95 million, and $19 million to its significant U.K., U.S., and other major pension plans, respectively.
Estimated Future Benefit Payments
Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2020 (in millions):
U.K.U.S.Other
2021$161 $192 $48 
2022$167 $193 $49 
2023$174 $190 $50 
2024$180 $192 $51 
2025$185 $183 $52 
2026 – 2030$1,007 $893 $274 
U.S. and Canadian Other Postretirement Benefits
The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2020 and 2019 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):
20202019
Accumulated projected benefit obligation$117 $103 
Fair value of plan assets17 16 
Funded status(100)(87)
Unrecognized prior-service credit(1)(1)
Unrecognized loss13 3 
Net amount recognized$(88)$(85)
Other information related to the Company’s other postretirement benefit plans are as follows:
202020192018
Net periodic benefit cost recognized (millions)$4$3$3
Weighted-average discount rate used to determine future benefit obligations
2.10 - 2.58%
2.93 - 3.25%
3.91 - 4.26%
Weighted-average discount rate used to determine net periodic benefit costs
2.93 - 3.25%
3.91 - 4.26%
3.32 - 3.64%
Based on current assumptions, the Company expects:
•The amount in Accumulated other comprehensive income expected to be recognized as a component of net periodic benefit cost during 2021 is $0.4 million net loss and $0.2 million of prior-service credit.
•To contribute $5 million to fund significant other postretirement benefit plans during 2021.
•Estimated future benefit payments will be approximately $5 million each year for 2021 through 2025, and $26 million in aggregate for 2026-2030.
For most of the participants in the U.S. plan, Aon’s liability for future plan cost increases for pre-65 and Medical Supplement plan coverage is limited to 5% per annum. Although the net employer trend rates range from 4% to 7% per year, because of this cap, these plans are effectively limited to 5% per year in the future.