2012 Hot Topics in Retirement - Aon

Defined Benefit Plans
Likely Changes in 2012
Likely Changes to Defined Benefit Plans in 2012
Changes
Nothing, continue with current open plan as is
If your plan is open to new entrants: close
participation and no longer allow new
employees to enter your defined benefit plan
If your plan has ongoing accruals: freeze
accruals and cease benefit accruals for
all/portion of participants
Reduce benefits but continue to o�er a defined
benefit plan to current and future employees
If you o�er a traditional plan: change to a
hybrid plan (cash balance or pension equity)
Extend participation to new hires (if plan
is closed) and/or restart benefit accruals
(if plan is frozen)
Terminate the plan and fully fund and
remove all company liability through
lump-sum payout to participants or
third-party annuity purchase
Change to other plan design (“fair value,”
“stable value,” “retirement shares,” or other
pension design)
(n ranges from 85 to 227)
This section of the report shows findings from employers that provide any
form of defined benefit plan, whether open, closed, or frozen. Depending
on the questions, results may be shown for a subset of these respondents,
as indicated.
Most defined benefit plan sponsors (80%) are very or somewhat likely to
continue with their current defined benefit plan and do not plan to change
the program design. This result is consistent with survey results from the past
several years. Employers that plan to make changes are likely to either freeze
future accruals for their current employees or close the plan to new entrants.
Very few sponsors are planning to change their defined benefit formula from
one form to another.
Very
Likely
69%
10%
5%
6%
2%
2%
1%
0%
Somewhat
Likely
11%
8%
12%
5%
2%
1%
3%
2%
Somewhat
Unlikely
5%
10%
10%
14%
7%
2%
7%
4%
Very
Unlikely
15%
72%
73%
75%
89%
95%
89%
94%
Aon Hewitt 33