Aon relaunches retention instrument for construction sector
Aon relaunches retention instrument for construction sector | Insurance Business New Zealand
Insurance News
Aon relaunches retention instrument for construction sector
Aon unveils updated retention instrument in response to Construction Contracts Act amendments, aiding New Zealand’s construction industry
Insurance News
By
Miko Pagaduan
Aon, a global professional services firm, has announced the re-launch of its Retention Instrument in the New Zealand market.
This complying instrument allows the construction sector to access retention money during commercial projects, following recent amendments to the Construction Contracts Act 2002 (CCA).
The Retention Instrument, the first of its kind in New Zealand, provides a means for protecting a specific dollar amount of retentions.
It eliminates the need to hold retention money on trust in the form of cash, enabling businesses to utilize these funds more effectively.
The Construction Contracts (Retention Money) Amendment Act 2023, which comes into effect on 5 October 2023, strengthens the retention regime outlined in the CCA.
The Amendment Act applies to both principals and head contractors involved in commercial construction contracts.
Aon national manager Warren Tucker said there was clear need in the construction sector in New Zealand for a complying instrument, which is even more timely when considering the challenges facing the construction industry with material cost inflation, labour shortages, supply chain disruptions and credit constraints.
Tucker highlighted the benefits of the Retention Instrument, including its ability to free up cash that would otherwise be held separately for protected retentions.
He emphasized that the legislative changes introduced by the Amendment Act necessitated the development of this solution to support and grow businesses during a complex and challenging time for the industry.
The Amendment Act grants the Ministry of Business, Innovation, and Employment (MBIE) the authority to administer and enforce the handling of retentions.
This includes the power to investigate and prosecute newly created retention money offences, with potential fines of up to $50,000 for each offence for individuals and up to $200,000 for each offence for entities.
By relaunching its Retention Instrument, Aon aims to assist the construction sector in navigating the amended legislation, ensuring compliance while unlocking the capital held within businesses.
For more information about Aon’s Retention Instrument and its benefits for the construction sector in New Zealand, visit aon.co.nz.
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