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
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."
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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 Hewitt
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