Aon Hewitt's survey of 183 defined benefit (DB) plan sponsors reveals nearly one-quarter (22 percent) are very likely to offer terminated vested participants a lump sum window in 2015. Additionally, 19 percent of employers plan to increase cash contributions to reduce PBGC premiums in the year ahead, and 21 percent are considering purchasing annuities for a portion of their plan participants.
"A growing number of plan sponsors anticipate increasing pension plan costs due to recent changes to the Society of Actuaries longevity models and rising PBGC premiums," explained Ari Jacobs, Global Retirement Solutions leader at Aon Hewitt. "Settlement strategies may be an appropriate approach for well-funded DB plans so that pension plan sponsors are able to honor the retirement benefits promised to participants, while also considering the long-term financial outlook of the plan."
Aon Hewitt's survey also revealed pension plan sponsors are increasingly adjusting plan assets to better match liabilities. More than one-third (36 percent) have recently made this shift and of the remaining group, another 31 percent are very likely to do so in the year ahead.
"Pension plan sponsors are planning ahead and are taking actions now to better position themselves to manage volatility in their pension plans no matter what the future economic environment brings," explained Rob Austin, director of Retirement Research at Aon Hewitt.
Other key findings
-
74 percent of companies have a DB plan:
-
35 percent have an open, on-going pension plan
-
34 percent have a plan that is closed to new hires
-
31 percent have a frozen plan
-
45 percent of companies recently conducted an asset liability study. Of those that have not done so, 25 percent are somewhat or very likely to in 2015
-
18 percent of companies performed a mortality study in 2014; 10 percent plan to do so in 2015
-
26 percent of companies currently monitor the funded status of their plan on a daily basis, up from just 12 percent in 2013
To access the report click here
|
