Many Companies with Frozen Pension Plans Come One Step Closer to Plan Termination, Says Aon Consulting
07 Maggio 2009 - 3:30PM
PR Newswire (US)
Change in Investment Strategy Signals the End for These Pension
Plans CHICAGO, May 7 /PRNewswire-FirstCall/ -- Many companies with
frozen pension plans are intending to change their investment
strategy in the near future, reducing corporate pension expense
volatility and placing themselves one step closer to plan
termination, according to a new survey by Aon Consulting, the
global human capital consulting organization of Aon Corporation
(NYSE:AOC). (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) Aon
Consulting surveyed more than 70 U.S. organizations, with a
cumulative total of frozen pension plan assets of over $50 billion,
and found that 81 percent are planning to change their investment
strategy in the near future, with many looking to hedge significant
risks (35 percent), change investments to reflect the shorter
investment horizon to termination (27 percent), or move to a more
liability-driven-investment strategy (19 percent). "The majority of
plan sponsors want to terminate their frozen plans quickly, but
don't have sufficient assets to do so," said Cecil Hemingway, U.S.
Retirement Practice Leader with Aon Consulting. "Survey
participants told us they made the design changes associated with
closing their pension plans (soft freeze) or ending future benefit
accruals (hard freeze). However, without addressing the investment
paradigm, they are leaving themselves open to significant future
risk. Those shifting investment strategies are addressing the risks
still inherent in their pension plans, while getting their plans as
well funded as quickly as possible." Beyond modifying the pension
plan's investment strategies, 68 percent of those surveyed have
reviewed the expected future cash needs associated with their
pension plans and found that additional cuts, outside the pension
plan, will likely need to be made. Interestingly, many
organizations plan to make cuts in the areas of hiring and training
(both new and existing staff) to address these needs. Conversely,
this survey revealed that 19 percent of organizations currently do
not have plans to revise their investment strategies as a precursor
to plan termination. Instead, these companies are retaining their
current investment structure or moving away from a low-risk,
low-volatility structure in an attempt to capture some of the gain
they believe will come about in the near future. "Companies that
continue to invest the way they always have will continue to
experience considerable volatility in both their accounting expense
and contribution requirements, which can equal millions of dollars
in lost assets," said Hemingway. "Investment strategies that
reflect the special nature of a frozen plan's liabilities and the
organization's ability to take risk can be used to mitigate that
volatility and assist plan sponsors with their desire to safely
fund these plans. "Ultimately, plan sponsors of frozen pension
plans have to decide whether they want to terminate their plan,
start it up again, eliminate or mitigate accompanying risk, or
change the benefits provided under the program. Without a plan,
it's highly unlikely that companies will be happy with their
pension plans five years from today, and will instead be thinking
about what they need to do in order to address the funding
shortfalls and economic drain of the plan since it still exists and
still has not been addressed." To learn more about Aon Consulting's
Ready 2012 survey findings, please click on the following link
http://insight.aon.com/?elqPURLPage=3764. About Aon Consulting Aon
Consulting Worldwide is among the top global human capital
consulting firms, with 2008 revenues of $1.358 billion and more
than 6,300 professionals in 117 offices worldwide. Aon Consulting
works with organizations to improve business performance and shape
the workplace of the future through employee benefits, talent
management and rewards strategies and solutions. Aon Consulting was
named the best employee benefit consulting firm by the readers of
Business Insurance magazine in 2006, 2007 and 2008. For more
information on Aon, please visit http://www.aon.mediaroom.com/.
About Aon Aon Corporation is the leading global provider of risk
management services, insurance and reinsurance brokerage, and human
capital consulting. Through its more than 37,000 colleagues
worldwide, Aon readily delivers distinctive client value via
innovative and effective risk management and workforce productivity
solutions. Aon's industry-leading global resources and technical
expertise are delivered locally through more than 500 offices in
more than 120 countries. Named the world's best broker by Euromoney
magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest
on Business Insurance's listing of the world's largest insurance
brokers based on commercial retail, wholesale, reinsurance and
personal lines brokerage revenues in 2008. A.M. Best deemed Aon the
number one insurance broker based on brokerage revenues in 2007 and
2008, and Aon was voted best insurance intermediary, best
reinsurance intermediary and best employee benefits consulting firm
in 2007 and 2008 by the readers of Business Insurance. For more
information on Aon, log onto http://www.aon.com/. Media Contact:
Joe Micucci 312-381-4786
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Joe Micucci of Aon Corporation, +1-312-381-4786, Web Site:
http://www.aon.com/
Copyright
Grafico Azioni AON (NYSE:AOC)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni AON (NYSE:AOC)
Storico
Da Lug 2023 a Lug 2024
Notizie in Tempo Reale relative a Aon Corp. (Borsa di New York (NYSE)): 0 articoli recenti
Più Aon Corp. Articoli Notizie