AOC Aon Corp.

Neither Side Managing Retirement Risk Properly CHICAGO, Sept. 30 /PRNewswire-FirstCall/ -- Many employees are waiting for an economic recovery before moving forward with retirement, and employers are taking the same attitude with retirement program changes and risk issues, according to 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 1,313 employers nationwide in its 2009 Benefits & Talent Survey, and found that more than 90 percent are not changing their retirement programs, either in terms of benefits or management. Along those lines, 87 percent of respondents said employees are delaying retirement due to economic conditions. What's more, a third of employers have less than 70 percent of their employees enrolled in their defined contribution (DC) plans, with the majority (67 percent) saying they believe workers are not enrolled because they can't afford it. Meanwhile, 38 percent of these employers believe employees have little knowledge of the funds needed for retirement and 52 percent said employees have only some idea of what's needed to retire with enough funds. Just 8 percent believe their employees have a strong understanding of the funds needed in retirement. Workers wanting to learn more about retirement savings have turned to their employers for additional information. In fact, 64 percent of responding employers said there was an increase in investment-related questions in 2008 vs. 2007, but only about a third of these organizations increased their communications around the importance of saving for retirement last year, while 62 percent said their communication remained unchanged from the previous year. "The 'wait-and-see' attitude is not surprising," said Amol Mhatre, senior vice president responsible for retirement innovation with Aon Consulting. "We may continue to see dramatic economic swings, as interdependencies grow in the global economy, and retirement programs and savings can't stop with every downturn. Retirement security for working Americans will soon become a challenge for policy makers and employers, along the lines of health care reform. With a trend toward individual responsibility, increased mobility, complex investment choices, rising cost of health care and improved life expectancy, employers may have to do more to help workers understand and plan for their retirement needs." In addition to not changing their retirement communications strategy, 92 percent of organizations are not changing their pension/defined benefit (DB) programs in the near future, citing the high cost of company-required contributions (71 percent), volatility (47 percent) and administrative costs (35 percent) as the main reasons. Employers also are not changing the risk profile of their pension plans, as two-thirds of these organizations have not made changes to their pension investments during the past two years and do not intend to do so in the next two years. The survey also revealed that only 45 percent of employers offer a DB plan to their employees. That said, 41 percent of employers have frozen their pension plans to new entrants, 25 percent have frozen their plans entirely and do not have a strategy regarding plan termination, and 20 percent have frozen their plans and intend to terminate the plan once funding allows. "We do not subscribe to the 'wait-and-see' attitude for employers with frozen pension plans," said Kemp Ross, senior vice president with Aon Consulting and head of Aon Investment Consulting. "Employers have no real upside for taking on the financial risks and costs of frozen pension plans, so organizations need to establish an exit strategy for such plans, which can be executed with a balanced approach to funding and investments during the next few years, as financial markets recover." Trends in 401k Matches/Auto Enrollment This survey also revealed that 56 percent of respondents offer matching contributions on DC plans. Of those, approximately half provide a higher than 3 percent match. Additionally, 41 percent of employers have an automatic enrollment plan, with 53 percent implementing a default at 3 percent, and nearly all (99 percent) planning to keep their default percentage the same this year. "While most of our survey respondents did not cite changes to matching contributions, some financially constrained companies did suspend or modify their 401k match in response to the economic downturn," said Mhatre. "Companies should take this opportunity to look strategically at their retirement programs in the context of total reward strategies. "Defined contribution plans are increasingly the primary retirement vehicles for American workers. This will surely change how workers and policy makers view companies' fiduciary responsibilities. We had a third of survey respondents suggest that their fiduciary risks have increased since only a year ago. It is surprising that most companies have not taken actions to mitigate such risks by taking measures such as fiduciary training and review of their governance processes." About the Study Aon Consulting surveyed more than 1,300 employers nationwide for its 2009 Benefits and Talent Survey. This annual survey provides a glimpse into the strategies and tactics companies are using to ensure that they continue to improve talent, reward success and prepare for economic recovery. It includes findings in the areas of Retirement, Health Care and Workforce Management. To learn more about this survey, please click on the following link http://insight.aon.com/?elqPURLPage=4552. About Aon Consulting Aon Consulting is among the top global human capital consulting firms, with 2008 revenues of $1.358 billion and more than 6,300 professionals in 229 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 (NYSE:AOC) 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/

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