2012 Hot Topics in Retirement - Aon

Current and Future Actions on Target-Date Portfolios
Completed
Recently/
Not Needed Actions
37%
33%
18%
22%
15%
(n ranges from 185 to 295)
Perform a comprehensive review of
the fund manager
Perform a comprehensive review of
the fund glide path
Change fund managers
Move from a primarily active to a
primarily passive target-date fund
approach
Move to a customized solution for
target-date funds (glide path and/
or underlying investments)
Retirement Income
Solutions/Annuities
Likelihood of Action in 2012
(Among Plans That Have Not Completed Recently)
Very
Likely
24%
17%
4%
1%
1%
Somewhat
Likely
36%
36%
9%
6%
6%
Somewhat
Unlikely
20%
25%
28%
33%
25%
Very
Unlikely
21%
23%
60%
60%
68%
As employees increasingly depend on the defined contribution plan to fund
their future retirement income, the annuity gap left by defined benefit plans
has become a larger focus. To meet this need, over the past few years insurance
companies have introduced innovative and varied retirement income solutions
for the defined contribution industry that reside outside the plan, within the
plan, or alongside the plan. Most plan sponsors continue to monitor these
activities, while some are adopting in 2012.
Currently, 16% of plans o�er an “in-plan” solution, including either an insurance
product, a managed account with a drawdown feature, or a managed payout
fund. Additionally, among those plans not o�ering, 22% plan to adopt one of
these solutions during 2012. The most popular solution reported is managed
accounts with a drawdown feature.
Whether or not organizations o�er an in-plan retirement income solution
option, most are trying to help employees understand what they can spend
each year in retirement. Seventy-one percent of plans provide online
modeling tools for that purpose, and of those that do not provide modeling
tools today, 64% are very or somewhat likely to add these tools in the coming
year. Further, 42% of plans allow participants to elect an automatic payment
option from the plan over an extended period of time.
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