Aon Hewitt Survey Reveals Employers Making Retirement Readiness a Top Priority

Aon Hewitt Survey Reveals Employers Making Retirement Readiness a Top Priority

More Companies Adding Defined Contribution Plan Features to Simplify Investing
Decisions

PR Newswire

LINCOLNSHIRE, Ill., Jan. 16, 2013

LINCOLNSHIRE, Ill., Jan. 16, 2013 /PRNewswire/ --As the financial landscape
continues to evolve in a challenging economic environment, workers are under
more pressure than ever before to save for their future. A new survey by Aon
Hewitt, the global human resources solutions business of Aon plc (NYSE: AON),
reveals that improving the financial wellness of their workforce has become a
bigger priority for many employers. To help employees save and prepare for
retirement, employers are taking steps to ensure workers understand the
financial resources they need to retire, while also offering more
sophisticated defined contribution (DC) plan features that make investing
easier and more accessible.

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Aon Hewitt surveyed more than 425 U.S. employers, representing 11 million
employees, to determine their current and future retirement benefits
strategies. According to Aon Hewitt, workers need 11 times their final pay to
meet their financial needs in retirement, but the average U.S. worker has a
savings shortfall of 2.2 times pay. Aon Hewitt's survey shows that to help
bridge this gap, most employers (80 percent) are making financial wellness a
top priority in 2013. Almost two-thirds (61 percent) are looking beyond
current participation and savings rates and are helping workers evaluate their
retirement readiness, up from 50 percent in 2012. Additionally, 86 percent of
companies plan to focus communications initiatives on helping workers evaluate
and understand how much they need to save for retirement.

"Employers understand that financial wellness is more than what workers are
doing today in terms of savings in their retirement programs—that it's
evaluating whether their long-term investment strategies are positioning them
to be ready when it comes time to retire, and whether other priorities are
getting in the way," said Patti Balthazor Björk, director of Retirement
Research at Aon Hewitt. "Helping workers get an accurate picture of their
future needs and whether they are on track to meet those needs, and helping
them create a roadmap for achieving those goals is paramount."

To help workers reach their retirement goals, employers continue to offer and
promote the use of investment advisory tools. More than three-quarters (76
percent) currently offer target-date funds as a way to provide workers with a
simple and straightforward approach to investing. Of those who do not offer
target-date funds, 35 percent will likely add this option in 2013. Managed
accounts and online third-party investment advisory services also continue to
gain popularity (64 percent), up from just 40 percent in 2012.

"To ensure that a worker's investment risk exposure appropriately matches
their needs given their age and other factors, it is critical that 401(k)
investors periodically rebalance their portfolios. However, we know that most
rarely, if ever, do so because they are overwhelmed or unsure about their
investment choices," explained Björk. "Features like target-date funds and
managed accounts take some of the guess work out of investing, which can help
workers stay on track with their savings goals."

In addition to focusing on financial wellness, Aon Hewitt's survey shows
employers are making plan design changes to their DC plans to help workers
better manage their money once they reach retirement. The popularity of
retirement income solutions—or annuities—continues to rise. Currently, 28
percent of companies offer in-plan retirement income solutions—including
professionally managed accounts with a drawdown feature, managed payout funds,
or insurance or annuity products that are part of the fund line-up. This is
nearly twice the percentage of employers (16 percent) that offered these
solutions in 2012. Of those employers that do not currently have these
options, 30 percent said they are likely to add them in 2013.

"Retirement income solutions offer employees a way to receive regular,
scheduled payments from their DC plan much like what they would have seen from
a traditional DB plan. These solutions have become increasingly attractive to
workers because they enable them to manage their retirement income in a
predictable way once they reach retirement," said Björk. "However, some
employers are hesitant to add these features in part because of administrative
and fiduciary challenges associated with implementation. Additionally, some
companies are waiting to allow the market to mature and products to evolve
further."

Other key findings:

  o52 percent of companies will use podcasts and 42 percent will use text
    messages to communicate and educate their workers on their retirement
    benefits in 2013.
  oThe percentage of plan sponsors that plan to use social media channels to
    communicate with workers has tripled from 6 percent in 2012, to 18 percent
    in 2013.
  o37 percent of employers have recently reviewed the total DC plan costs
    (fund, recordkeeping, and trustee fees). Among those who have not, 95
    percent are likely to do so in 2013.
  o35 percent of employers completed a review of DC fund operations,
    including fund expenses and revenue sharing; 87 percent plan to do so this
    year.
  o31 percent of employers recently changed their DC plan fund lineup to
    reduce costs. More than half (52 percent) of the remaining companies may
    do so in 2013.

About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions. The company
partners with organizations to solve their most complex benefits, talent and
related financial challenges, and improve business performance. Aon Hewitt
designs, implements, communicates and administers a wide range of human
capital, retirement, investment management, health care, compensation and
talent management strategies. With more than 29,000 professionals in 90
countries, Aon Hewitt makes the world a better place to work for clients and
their employees. For more information on Aon Hewitt, please visit
www.aonhewitt.com.

About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management,
insurance and reinsurance brokerage, and human resources solutions and
outsourcing services. Through its more than 61,000 colleagues worldwide, Aon
unites to empower results for clients in over 120 countries via innovative and
effective risk and people solutions and through industry-leading global
resources and technical expertise. Aon has been named repeatedly as the
world's best broker, best insurance intermediary, reinsurance intermediary,
captives manager and best employee benefits consulting firm by multiple
industry sources. Visit www.aon.com for more information on Aon and
www.aon.com/manchesterunited to learn about Aon's global partnership and shirt
sponsorship with Manchester United.

MacKenzie Lucas, 847-442-2995, mackenzie.lucas@aonhewitt.com
Maurissa Kanter, 847-442-0952, maurissa.kanter@aonhewitt.com

SOURCE Aon plc

Website: http://www.aon.com