2009 Outlook for Retirement Benefits
December 29, 2008
Plan sponsors are faced with the challenge of balancing retirement benefit costs and risks as well as preserving the human capital needed to achieve longer-term business objectives – all while navigating a very rough economic environment in the coming year. Among the issues they are grappling with:
- How plan sponsors are responding to concerns raised by employees regarding market losses in their 401(k) accounts. What about 401(k) matches?
- Are more employers thinking of freezing or terminating their defined benefit pension plans?
- Actions companies are taking in light of defined benefit underfunding resulting from the market meltdown, and the need for large contributions to some plans due to the Pension Protection Act funding rules. Are plan sponsors waiting to see what legislative relief is passed in 2009 or are they taking alternative steps now?
- Consideration employers are giving to longer-term retirement plan redesign due to financial markets volatility.
- De-risking defined benefit pensions through liability-driven investing and other risk mitigation techniques.
- Are employer-sponsored investment education, financial management tools and resources adequate for providing support to participants in defined contribution plans?
- How plan sponsors are communicating with employees about their pensions and defined contribution savings plans. Is the relative security of a defined benefit pension plan being promoted to participants? Are Pension Protection Act benefit restrictions and a plan's funded status communicated clearly? How are vendors helping out?