2012 Hot Topics in Retirement - Aon

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Concern Reported About Pension Plan Funded Status Concern Increased contribution requirements Increased pension expense as reported on company’s income statement Financial position as reported on company’s balance sheet Impact on participant benefits (n ranges from 235 to 236) Pension Calculation Administration 40 Aon Hewitt Very Concerned 37% 37% 23% 10% Somewhat Concerned 41% 37% 40% 30% Somewhat Unconcerned 13% 15% 23% 35% Completely Unconcerned 10% 10% 14% 25% Currently, nearly 60% of plans have their calculations fully outsourced, another 25% use a co-sourced solution, and 18% are performed in-house. In the next two years, however, plan sponsors are expected to outsource more of the calculations. Current Calculations In-House 18% Co-Sourced 25% Outsourced 57% (n=240) Likely Calculations in Two Years In-House 15% Co-Sourced 20% Outsourced 65% (n=162)
Funding Policy One-half of respondents state that they are planning to contribute to their defined benefit plan only the necessary amount as defined by the regulations. Nonetheless, a sizable number (26%) are planning to conduct an asset liability study or assess the contribution volatility under di�erent deterministic scenarios (25%). While only a handful of plans (4%) are considering immediately de-risking their plans this year, more than one-third of plan sponsors (36%) are going to consider a longer-term option for de-risking. Funding Policy Considerations in 2012 Policy Consideration Contribute the amount necessary as defined by the regulations No change because we already employ an asset/liability-driven investment strategy Considering options for de-risking strategies over a period of time Conduct an asset/liability modeling study Assess contribution volatility under various deterministic scenarios Establish a formal funding strategy based on company’s financial goals Settling liabilities through annuity purchase or lump-sum payments Immediately de-risking to eliminate risk No change because we are expecting the market to turn around Increased exposure to higher-risk investments Other (n=213; multiple responses) Percentage of Plans 50% 36% 36% 26% 25% 15% 12% 4% 3% 3% 1% Aon Hewitt 41
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 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: Pension Plan Funded Status With his
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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