2012 Hot Topics in Retirement - Aon

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10 Aon Hewitt Overview of Retirement Plans Types of Retirement Plans O�ered to New Employees For the vast majority of new employees to an organization, the defined contribution plan will be o�ered (98%) and will be their primary employerprovided vehicle to build wealth for the future. Only a few (23%) will find an “open” defined benefit plan, meaning that new employees will be eligible to accrue pension benefits, and only about one in five (23%) o�er subsidized retiree medical plans to new hires. Defined Contribution Plans Yes 98% No 2% (n=501) Defined Benefit Plans Yes 23% No 77% (n=501) Retiree Medical Plans Yes 23% No 77% (n=501)
Defined Benefit Status —Among Sponsors O�ering Defined Benefit Plan Status (n ranges from 68 to 293) Defined benefit sponsorship has continued to slowly decline. While only 23% of employers o�er defined benefit plans to new hires, 59% of employers carry a pension liability on their books. Larger employers (with more than 10,000 employees) are far more likely to o�er a defined benefit plan. Among defined benefit plan sponsors, the benefits can be categorized into one of three statuses—open, closed, or frozen: 39% are open plans providing benefit accruals to new employees, and larger plans are more likely to have open plans; this is slightly lower than in the 2011 and 2010 surveys (41% and 45%, respectively). Larger employers were more likely to have open plans, with 47% of employers with 10,000 to 24,999 employees, and 53% of employers with more than 25,000 employees. 36% have been closed to new entrants, allowing some segments of their employee population to accrue additional benefits but not new hires; this is a slight increase from last year at 32%. 26% are frozen, where no participants are accruing additional benefits; this is nearly unchanged from last year’s response of 27%, although higher than the 24% reported in 2010. Of all defined benefit plans—open, closed, or frozen—more than three-quarters of plans (77%) provide benefits based on traditional formulas such as a final average pay plan or career average pay plan. The remainder (23%) use hybrid plan formulas, such as cash balance or pension equity formulas. (Among Sponsors O�ering) All DB Plans Traditional DB Plans Hybrid DB Plans Open Plan Closed Plan Frozen Plan 39% 36% 26% 35% 37% 28% 53% 31% 16% Aon Hewitt 11
Page 1 and 2: Consulting/HR Outsourcing Retiremen
Page 3 and 4: 4 10 14 33 42 48 2012 Hot Topics in
Page 5 and 6: Enhanced Automation and Individuali
Page 7 and 8: Defined Contribution Plans: Increas
Page 9: Retiree Medical Plans: Reducing Cos
Page 13 and 14: Retirement Plan Initiatives for 201
Page 15 and 16: Employers understand the importance
Page 17 and 18: Initial Contribution Rate Default U
Page 19 and 20: Contribution Escalation Getting ind
Page 21 and 22: Roth Most financial experts agree t
Page 23 and 24: Employer Matching Contributions Inv
Page 25 and 26: Current and Future Actions on Targe
Page 27 and 28: Barriers to Adding Retirement Incom
Page 29 and 30: Communication Initiatives Many empl
Page 31 and 32: Managing Risk and Plan Expenses Ove
Page 33 and 34: Defined Benefit Plans Likely Change
Page 35 and 36: Likely Actions Planned in 2012 Risk
Page 37 and 38: Confidence and Priority Level of Ri
Page 39 and 40: Pension Plan Funded Status With his
Page 41 and 42: Funding Policy One-half of responde
Page 43 and 44: Percentage of Employers With a Pre-
Page 45 and 46: Changes to Benefits From 2011 to 20
Page 47 and 48: Likely Changes to Retiree Health Be
Page 50: About Aon Hewitt Aon Hewitt is the

2012 Hot Topics in Retirement - Aon

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