2012 Hot Topics in Retirement - Aon

Confidence and Priority Level of Risks in Defined Benefit Plans and Priorities
Risk Management Topic
Compliance risk
Fiduciary risk
Diversification risk
Litigation risk
Investment risk
Plan design risk (aspects of the plan
design, such as lump sums or final average
pay provisions)
Interest rate risk
Demographic risk (changes in participant
demographics, such as retirement patterns)
Longevity risk
(n ranges from 233 to 235)
Plan sponsors felt the most confident in their ability to handle compliance and
fiduciary risk, but felt the least confident that they could e�ectively manage
demographic and longevity risk. Three-quarters of all respondents indicated
that investment risk is a high priority of risk management, followed by interest
rate risk, which was cited by 63% of employers.
Very
Confident
1
43%
42%
38%
38%
37%
36%
31%
30%
Confidence Level
43%
2 3 4 5
9%
43% 10%
44% 13%
42% 13%
46% 13%
42% 14%
40% 22%
40% 19%
2%
3%
3%
4%
5%
5%
6%
9%
26% 34%
25% 12%
1%
1%
2%
3%
0%
2%
1%
2%
2%
Not
Confident
at All
6
1%
0%
0%
0%
0%
0%
0%
0%
1%
High
Priority
1
49%
45%
40%
27%
75%
22%
63%
20%
17%
Priority Level
Medium
Priority
2
34%
39%
43%
37%
21%
46%
28%
42%
43%
Low
Priority
3
17%
16%
17%
36%
4%
33%
9%
38%
40%
Aon Hewitt 37