It’s been a rough year. Volatile markets have led many pension plan sponsors to reassess their asset management strategies, with many opting out of DB plans altogether. On the benefits front, rising healthcare costs have sparked an interest in incentives (financial or otherwise) to encourage healthy behaviour among employees, while work/life balance is a growing concern in our “always-on” workforce.
Towers Watson has released its choices for top trends for pension and benefits plan sponsors over the past 12 months. As we say goodbye to 2011, here’s a look back at some that seem poised to carry on into the new year.
Trend: Moving from DB to DC
The past year saw more plan sponsors shift from DB to DC plans—a trend that shows no sign of changing as plan sponsors worry more and more about pension funding. According to Towers Watson’s research, 51% of private sector DB plan respondents have converted their plans to DC for current or future employees, and 56% believe the funding crisis will persist for the long term.
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Trend: Shifting assets
No surprise, 2011’s market volatility led many plan sponsors to re-examine their asset allocations. Large plan sponsors have shifted away from equities and into alternative investments such as infrastructure and real estate over the past year, while small plan sponsors have shifted into fixed income investments.
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- Why pension plans are investing in alternatives
- Alternatives becoming the new core
- How one plan sponsor is making alternatives work
Trend: Delaying retirement
Canadians learned they could expect to work longer due to threats of a recession, continuing market turmoil and declining interest rates. According to Towers Watson’s Pension Freedom Index, Canadians are now looking at a retirement age of 67.
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- Making sense of the CPP changes
- Why we need a lifetime retirement saving limit
- Boomers plagued by retirement worries
Trend: Finding work/life balance
While Canadians are working harder and longer hours, their employers are failing to recognize the importance of work/life balance. According to Towers Watson’s research, 89% of Canadian employers know they have a problem with excessive workload—a 25% jump from 2009—and 25% said their employees are taking less time off. Yet despite these figures, employers are underestimating the effect that work-related stress has on employees. Employees surveyed rated work stress as the top reason they would leave an organization, yet employers only ranked it in fifth place.
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- Helping employees keep resolutions a good business move
- Is employee stress hurting your organization?
- Helping employees put work/life in balance
Trend: Offering financial health incentives
As healthcare costs continue to increase, 26% of Canadian employers are planning to offer some type of financial reward in 2012 to individuals who participate in their health management programs—up from just 13% who currently do so.
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