Unpacking the Target Benefit Plan - Employers are getting creative in attracting and retaining high performers
Second in a series of Guides on Target Benefit Pension Plans published by Aon Hewitt.
TORONTO, Sept. 27, 2012 /CNW/ - Aon Hewitt is releasing its 2nd Guide, Unpacking the Target Benefit Plan: Finding the Right Benefit/Funding Balance. A companion to the first guide, Target Benefit Plans, released in June 2012, this new guide takes a practical look at the issues surrounding pension benefit affordability and sustainability testing.
Finding the Right Benefit/Funding Balance presents a framework for affordability testing and creating a benefit/funding policy, as well as providing examples drawn from actual situations. It also proposes a set of principles with a view to forming a good foundation for Target Benefit (TB) sustainability testing, and which might be used by regulators to create a suitable framework for monitoring TB plans.
TB Pension Plans are at the forefront of today's discussions of sustainable retirement solutions in Canada. "Over half the pension regulatory bodies in the country are wrestling with the concept and are in various stages of drafting legislation and regulations to provide for the TB approach," says Karen Hall, Vice President, Retirement for Aon Hewitt, and one of the guide's primary contributors. "The purpose of this Guide is to discuss in more detail the question of benefit affordability and sustaining the TB offering,"
Claude Lockhead, Partner, Canadian Investment Consulting Practice and responsible for the Retirement Practice, Eastern Canada for Aon Hewitt, thinks that testing the sustainability of a TB Plan's benefit/funding balance requires a paradigm shift away from traditional DB valuation thinking. "What is needed is a risk management approach, where the analysis evaluates the probability, over a specified period of time, that the plan would be able to deliver the targeted benefit with a high degree of certainty."
Canadians authorities have regulated the DB and DC design to death, but with little positive impact on actually delivering sustainable retirement systems. "While it is time for change, we don't necessarily need radical change," concludes Barry Gros, Vice President for Aon Hewitt and one of the guide's primary contributors. "We actually have the tools in place—we just need to use them more effectively and permit more flexibility in their application."
About Aon Hewitt
Aon Hewitt is the global leader in human resources 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.
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.
SOURCE: AON HewittFor further information:
Alexandre Daudelin │ +1.514.982.4910 │ firstname.lastname@example.org