2015 Hot topics in Retirement

Aon Hewitt’s ninth installment of an annual benchmarking report that examines the retirement focus areas of plan sponsors in the upcoming year.

Aon Hewitt’s ninth installment of an annual benchmarking report that examines the retirement focus areas of plan sponsors in the upcoming year. The content in this report is based on survey responses from nearly 250 employers representing 6 million employees. Three themes emerged from this survey:

1. There is wide accord among plan sponsors regarding expansion of their financial wellness focus.

• In 2015, 93% of companies are very or moderately likely to create or broaden their efforts on financial wellness topics in a manner that extends beyond retirement decisions.

• Half of all companies believe the significance of financial wellness concepts has increased over the last two years.

2. Employers will leverage their scale and size to improve the defined contribution plan for participants.

• Products, services, and tools that provide savings and investing assistance to participants continue to gain favor. By the end of the year, features such as online guidance, managed accounts, and phone access to financial planners or investment advisors are expected to be the norm, not the exception. The price for these services in the plan is less than what most individuals would pay on the retail market.

• Thirty percent of plan sponsors have recently moved from mutual funds to institutional or separately managed accounts. Additionally, roughly two-thirds of all plan sponsors are very likely to review plan expenses and revenue sharing in 2015, and one-third are planning on changing funds in an effort to reduce costs.

3. Defined benefit plan sponsors continue to voraciously monitor and eliminate risk from their plans.

• In the wake of some high-profile annuity purchase announcements, nearly 20% of respondents indicated their willingness to purchase annuities in 2015. Few sponsors reported they will impact their active employees by closing the plan or freezing benefits, but many employers reported that they are likely to initiate a lump-sum window for terminated vested employees in the plan.

• Pension investment committees have been busy adjusting their plans’ investments to better match their plans’ liability characteristics. More than onequarter of plans now have an established glide path that increases exposure to fixed income securities and other risk-hedging strategies as the funded status improves.

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