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 strategies. " 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, cost control." 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 sessions. "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 Contributionmedical plan." 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 Sign up for News Alerts: http://aon.mediaroom.com/ Follow Aon Hewitt on Twitter @AonHewitt 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, 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. Media Contact: Alexandre Daudelin │ +1.514.982.4910 │email@example.com SOURCE: AON Hewitt To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2013/02/c2750.html CO: AON Hewitt ST: Ontario NI: ECO ECOSURV -0- May/02/2013 12:00 GMT
Canadian pension plan sponsors to focus on Improving members' understanding of retirement benefits, according to Aon Hewitt
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