AOC Aon Corp.

Employee engagement in health care a primary focus for employers CHICAGO, May 14 /PRNewswire-FirstCall/ -- As nearly 80 million baby boomers begin to retire, three in five organizations nationwide believe the majority of their employees are not financially prepared to leave the workforce, according to a new survey conducted by Aon Consulting, the human capital consulting organization of Aon Corporation (NYSE:AOC). (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) The Aon Consulting 2007 Benefits and Talent Survey of more than 2,000 organizations studied trends in retirement -- as well as talent management, health care and communication (see sections below for additional survey findings) -- and found that 62 percent of organizations expect that less than half of their workforce will have enough income to retire between the ages of 62 and 65. As the majority of employers shift away from offering defined benefit plans to defined contribution plans, more responsibility for managing retirement savings rests with individual employees. To educate employees about retirement needs, about 80 percent of employers offer personalized online retirement planning tools. Nonetheless, about 80 percent of employers believe their employees still do not fully understand how to invest their defined contribution plan assets. There also is a gap between the importance employers place on employee education regarding saving for retirement and the number of employers that provide this information. According to the Aon Consulting survey, 98 percent of employers say it is important for employees to know how much they will need at retirement so they can save accordingly, but 34 percent of organizations expect their employees to find this information on their own. "Personalized retirement planning tools and education are essential to help employees understand how much income they will need at retirement. Personalized communication incorporates both employer-sponsored retirement benefits and outside savings and investments," said Susan Alford, executive vice president and Defined Contribution national practice leader with Aon Consulting. "Communication materials provided by 401(k) providers are addressing this issue with replacement income projections and total reward statements. This type of communication helps the employee convert the percentage saved to a replacement income and addresses the adequacy and any shortfall in their personal situation," Alford added. Personalized information should include the employer-sponsored retirement benefits plus Social Security; a tangible savings target; the approximate value of a participant's savings account using sources such as current deferral rates and any matching contributions; and showing the participant if he or she is on track for retirement by calculating the difference between savings needs at retirement and the approximate value of the participant's savings account at retirement. The vast majority of organizations offer some type of defined contribution plan, and 82 percent of those organizations make contributions to the plan. However, the survey shows that contributions by employers and employees may be inadequate to prepare employees for retirement. The survey found that 26 percent of employers with 401(k) plans contribute less than 2 percent of payroll to the plan. Moreover, 40 percent of organizations that offer a defined contribution plan report that 75 to 100 percent of their employees contribute to the plan, with nearly 30 percent of organizations reporting that 50 percent or fewer of their employees contribute to the plan. Providing an automatic enrollment feature for employees has proven successful at ensuring more employees have at least a base level of retirement savings, but the Aon Consulting survey reported only 44 percent of employers currently offer or plan to offer this feature in the next 12 months. The remaining 56 percent have no plans to add automatic enrollment. "Automatic enrollment, automatic contribution, and automatic asset allocation are all plan options designed to enroll the employee in the plan contributing at a minimum level, increase the contributions as their pay increases and provide an asset allocation that is suitable for the employees age and target retirement date," Alford added. "We expect more employers to embrace these programs to increase participation and employee contributions as 401(k) vendors offer communication tools and technology to address this trend," she explained. Trends in Talent Management The Aon Consulting survey found that four out of five organizations consider recruiting and selecting talent a top or critical issue in 2007, and 63 percent believe their organization's need to recruit and select the best talent will increase or substantially increase in the next three to five years. This is not a surprise as the Bureau of Labor Statistics predicts a worker shortage of 10 million by 2010 in the United States, a shortage that is expected to increase steadily in the years thereafter, partly influenced by the aging workforce and baby boomer retirements. The impending worker shortage also will result in the loss of employees in leadership positions. The study found more than 40 percent of companies are currently experiencing or expect to experience a leadership shortage in the next one to four years. "Employers must recognize the need to bolster their leadership pipelines to replace retiring leaders, support the pace of growth within an organization, and to stay competitive," said Mark Lifter, executive vice president and Talent Solutions Consulting national practice leader with Aon Consulting. "Leadership development is an ongoing process, and top talent -- whether they are current employees or recruited externally -- will expect strong organizational support for development. This means differential investments in high potential, high performance people. To maximize returns on these investments in leadership talent, leadership development initiatives must be carefully aligned with workforce plans for pivotal performance positions, near and longer term talent gaps, and business strategy," Lifter added. In addition, the survey reported that when considering the most critical jobs, more than 98 percent of respondents expect that recruiting high-performing employees will continue to be difficult or increase in difficulty. One way to recruit high-performing employees is by effectively communicating the total compensation package (dollar value of benefits plus salary) to job candidates, but the study found this is not commonly practiced among employers. In fact, 77 percent of organizations provide a general overview of benefits with no dollar figure. Not communicating the dollar value of benefits in addition to pay has negatively impacted organizations seeking to hire top recruits. According to the Aon Consulting survey, when asked what the main reason was that organizations were unsuccessful in hiring top recruits in the past two years, 42 percent of organizations said the candidate went elsewhere for compensation that was perceived to be higher (based on pay and/or benefits). "As these results indicate, recruitment strategies should include a breakdown of the dollar value of benefits plus salary to ensure top job candidates are fully informed when choosing between organizations. With the impending leadership shortage, employers cannot afford to lose top job candidates to the competition," Lifter added. Trends in Health Care Employers are responding to the double-digit healthcare cost increases by offering initiatives that emphasize health and productivity and directly engage employees in managing their health. Implementing online healthcare tools is the most common healthcare cost and quality initiative, with 21 percent of organizations newly offering this resource to employees in 2007. Another 17 percent plan to offer this feature next year. Nineteen percent of employers are promoting exercise/physical activity in 2007 and another 15 percent plan to add this initiative in 2008. Other top initiatives in 2007 include the following: -- 18 percent of organizations are promoting the importance of health and productivity to employees. -- 18 percent are offering disease management programs. -- 15 percent are implementing wellness programs such as preventive care. "It is clear employers are focused on helping employees become more knowledgeable and engaged healthcare consumers, with a special emphasis on preventive care, promoting fitness, and disease management," said Tom Lerche, Health Care practice leader with Aon Consulting's Health and Benefits practice. "While these programs address the root cause of healthcare costs, employers are also investing in the use of predictive modeling, biometric testing and health risk appraisals to understand disease and cost drivers." Aligned with the trend of encouraging employees to actively manage their health, the survey also found the percentage of employers offering a consumer-driven health (CDH) plan has nearly doubled, from 13 percent as reported in the 2006 survey to 23 percent in 2007. Moreover, 13 percent of respondents are considering offering a CDH plan as an option in 2008, and 6 percent are considering offering a CDH plan as a full replacement for their current medical plan. "We continue to see a steady increase in the number of employers offering CDH options along with increased enrollment. CDH, with a fully integrated wellness program, remains one of the best strategic approaches for employers to reduce the medical trend rate," Lerche added. For further information: Sara Carlson 312.381.5045 http://www.aon.com/hcc About Aon Aon Corporation (http://www.aon.com/) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 43,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions. Aon Consulting Worldwide (http://www.aon.com/hcc) is among the top global human capital consulting firms, with 2006 revenues of $1.282 billion and 6,500 professionals in 117 offices worldwide. Aon Consulting is reshaping the workplace of the future through benefits, talent management and rewards strategies and solutions. In August 2006, Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine. This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to execute the stock repurchase program, potential regulatory or legislative changes that would affect our ability to sell, and be reimbursed at current levels for, our Sterling subsidiary's Medicare health product, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, ERISA class actions, the impact of the analysis of practices relating to stock options, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission. http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Sara Carlson of Aon Corporation, +1-312-381-5045, Web site: http://www.aon.com/ http://www.aon.com/hcc

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