Aon Hewitt Shares Target Benefit Plan Expertise
TORONTO, June 21, 2012 /CNW/ - The economic turmoil of the last decade has called into question the ability of traditional pension plans, both defined benefit and defined contribution, to adequately deliver sustainable retirement benefits.
Recognizing the need for more sustainable retirement solutions, Aon Hewitt is releasing its guide, Target Benefit Plans: The Future of Sustainable Retirement Programs, which outlines the need for a new approach to retirement plans and highlights its expertise in working with target benefit plans.
"Our guide on Target Benefit (TB) pension plans provides practical insights to what many in the pension industry have been touting as the future of retirement programs in Canada, by leveraging our extensive experience in implementing such schemes. TB clearly provides plan sponsors and plan members with another option to provide for a secure retirement," said Karen Hall, Associate Partner, for Aon Hewitt, and one of the guide's primary contributors.
What makes TB new and unique is that contribution levels are set first—at a fixed level—and benefits are derived from what can be afforded collectively by that contribution level, with the ability to adjust benefits as experience develops. TB succeeds through the adoption of a benefits/funding policy that prescribes in advance the methods for varying benefits based on affordability, should such adjustments be required, with pre-set reserve levels and a pre-determined order of benefit adjustments.
"Target Benefit plans are fairly straightforward and leverage the best aspects of DB and DC plans, while at the same time minimizing the key disadvantages of each. A key feature of our guide is that it provides several examples of sustainable pension plan designs from around the world, while highlighting two perfect examples of major organizations we work with in Canada that have adopted the TB approach," mentioned Claude Lockhead, Chair, Canadian Investment Consulting Practice, for Aon Hewitt.
Support for the TB approach is growing across the country, with several provinces having already passed legislation allowing this new approach. We expect other provinces to follow suit in the upcoming months.
"We actually have the tools in place—we just need to use them more effectively and permit more flexibility in their application. TB has great potential to achieve what we are all looking for: sustainable retirement income," stated Barry Gros, Associate Partner at Aon Hewitt, and one of the guide's primary contributors.
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.
For further information:
Alexandre Daudelin │ +1.514.982.4910 │ [email protected]