2012 Hot Topics in Retirement - Aon

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34 Aon Hewitt Plan sponsors continue to cite the expense of the pension plan (54%), cost volatility (33%), and operational risk (33%) as the primary reasons for cutting back on defined benefit plans. Among respondents that are unlikely to make changes to their ongoing defined benefit plans in 2012, the primary reason, reported by 14%, is the belief that their plans fit the needs and/or preferences of their workforces. Fifteen percent of respondents may evaluate the plan at a later date but have other priorities for 2012, and 18% of employers reported that the plan already limits future accruals to only a relatively small group of grandfathered employees. Primary Reason Defined Benefit Employers Are Not Making Changes in 2012 Reason Plan is already frozen; no need to change Plan already limits future accruals to small group of grandfathered employees Plan is an e�cient vehicle for delivering retirement benefits May evaluate plan at a later date but have other priorities for 2012 Fits workforce needs and/or preferences Plan is necessary to remain competitive Plan is overfunded and costs little to nothing; no reason to change PPA and recent court ruling validate hybrid plan design Other (n=180) Percentage of Plans 22% 18% 16% 15% 14% 7% 2% 0% 7%
Likely Actions Planned in 2012 Risk Management The most likely actions anticipated for defined benefit plan sponsors during 2012 include managing risk, reanalyzing their investment policy, changing administration processes, and dealing with an expected increase in retirement-eligible employees. Similar to the defined contribution responses, pension plan sponsors are focusing on risk-management strategies. Respondents are likely to perform funding and accounting projections, review funding strategy, and assess pension risks based on current strategies in 2012. These results are consistent with last year’s survey. In addition, 29% of respondents are very likely to conduct an asset-liability study, and nearly one-quarter (24%) will adjust equity exposure and/or overall asset allocation. Plan sponsors are less likely to allow in-service distributions as early as age 62, as permitted by the PPA, or change to a mark-to-market accounting (i.e., by eliminating gain/loss amortizations). Aon Hewitt 35
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 and 10: Retiree Medical Plans: Reducing Cos
Page 11 and 12: Defined Benefit Status —Among Spo
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: Defined Benefit Plans Likely Change
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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