Canadian pension plan sponsors to focus on Improving members' understanding of
retirement benefits, according to Aon Hewitt survey
TORONTO, May 2, 2013 /CNW/ - Canada's pension plan sponsors are focusing on
their communications with participants, particularly about retirement income
adequacy, according to the Canadian Retirement Trends Survey 2012 by Aon
Hewitt, the global human resource solutions business of Aon plc (NYSE:AON).
Among employers surveyed, 95% were somewhat or very confident in the
competitive position of their plans, which is a key tool in attracting and
retaining employees. However, only 16% were very confident theirmembers
understand the details of future retirement benefits, and only 12% are
confident members aretaking accountability for their own future. As a
result, 83% of those sponsors surveyed plan to review theircommunications
with their members. By comparison, 59% are likely to assess the design of
their plans in2013.
"Demographic changes in the coming decades will result in waves of retiring
baby boomers, with fewer workers available to support the retirement system,"
said Will da Silva, Senior Partner, Retirement Consulting at Aon Hewitt.
"However, shorter- term financial pressures and regulatory requirements appear
to be discouraging plan sponsors from addressing long-term sustainability
Aon Hewitt's Canadian Retirement Trends Survey polled Canadian employers to
assess their views and likely actions over the next year regarding the design,
management, and delivery of capital accumulation or defined contribution (DC)
plans, defined benefit (DB) plans, and retiree medical plans for their active,
salaried, Canadian-based employees. Responses from more than 200 employers
provide a preview of the changes likely to take place in retirement programs
over the coming months.
"Improving communications can help ensure employees are better informed and
can maximize the opportunities available to them. That way, employers could
achieve a more positive return on investment and minimize theliability risks
associated with inadequate communication efforts and materials," said da
Silva. "Other key areas of concern are governance of plans and, as always,
DB plan design changes are coming - but not this year
The absolute cost and cost volatility of DB plans remain the main incentives
for those sponsors looking atchanges. The number of closed or frozen DB
plans operated by survey respondents in Canada has continued to rise and has
reached 50%. Despite the signal this sends that near-term action is needed,
77%ofDB plan sponsors made no changes to their plans in 2012 and 68%
expect to maintain the status quo thisyear as well. In addition, 69% are
unlikely to evaluate phased retirement alternatives and 61% are unlikely to
analyze aging workforce issues. Only 2% have opted for a so-called "hard
freeze" for DB plans inCanada, far lower than in the United States.
Capital Accumulation Plans look for web-based education and new features
Capital Accumulation Plans (CAP) include Defined Contribution Plans, Group
RRSPs, Tax Free Savings Plans, Deferred Profit Sharing and Stock Plans. For
these, increased communication appears to be a clear focus, with 84% of CAP
sponsors planning to communicate with members about their plans, according
tothesurvey. Investment advisory services and financial education figure
prominently in plan sponsors planning efforts. While many organizations
continue to provide in-person services, with traditional call centres for
example, there is also a strong tendency toward online activities or Web-based
interactive communication that provide personalized financial education
"Three quarters of CAP plan sponsors will focus on communicating general
investment education messages to their plan members," said da Silva. "To do
so, about a third of the sponsors use Webcasts/Webinars todeliver financial
education and another 35% intend to do so in 2013."
Some changes to Retiree Health and Benefits
Although a majority of respondents are unlikely to make changes to their
retiree health program in 2013, due to the legal complexity of such changes,
almost one-third are likely to increase contribution levels for future
retirees. As well, 25% of plans will increase contribution rates for current
and future retirees and the same percentage plan to reduce benefits for the
future retirees or reduce or eliminate benefit eligibility altogether.
"It is apparent that many employers continue to make downward changes for
futures retirees with 20% offering no retiree medical coverage," said Greg
Durant, Chief Actuary, Health & Benefits Practice atAonHewitt. "We also
observe an emerging trend where 10% are likely to move toward a Defined
Copies of the report on the Canadian retirement Trends Survey 2012 are
available at http://www.aon.ca/surveys/retirement/AH_RT2012_Highlights_en.pdf
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About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future
through innovative talent, retirement and health solutions. We advise, design
and execute a wide range of solutions that enable clients to cultivate talent
to drive organizational and personal performance and growth, navigate
retirement risk while providing new levels of financial security, and redefine
health solutions for greater choice, affordability and wellness. Aon Hewitt
is the global leader in human resource solutions, with over 30,000
professionals in90countries serving more than 20,000 clients worldwide.
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 65,000 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,
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Media Contact: Alexandre Daudelin │ +1.514.982.4910
SOURCE: AON Hewitt
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