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Aon — Aon Hewitt — 2016 Retirement and Investment Webinar Series
26 slides from Aon's conference presentation, Jan 26, 2016
Slide 1: 2016 Retirement and Investment Webinar Series
2016 Retirement and Investment Webinar Series Nothing in this presentation should be construed as legal or investment advice. Please consult with your independent professional for any such advice. To protect the confidential and proprietary information included in this material, it may not be disclo
Slide 2: A Look Into the Crystal Ball: How Retirement Plans and Financial Well-Being Programs Will Evolve in 2016
A Look Into the Crystal Ball: How Retirement Plans and Financial Well-Being Programs Will Evolve in 2016 January 26, 2016 • Rob Austin • Kenje Mallot • Lisa McRae Aon Hewitt Retirement and Investment
Slide 3: The Current Landscape
The Current Landscape Americans need help with financial literacy 60% have no budget1 24% do not pay bills on time1 Paychecks are being stretched thinner Average 2016 base pay increase is 3%2 Average 2016 healthcare premium increase is 4%3 The baby boomers are retiring 10,000 individuals turn age 65
Slide 4: What Will Happen in 2016?
What Will Happen in 2016? In 2016, employers are helping by: Offering more tools and services for improving workers’ financial well-being Enabling workers to keep more money earmarked for retirement Assisting individuals with navigating the retirement process Aon Hewitt Retirement and Investment 4
Slide 5: About this Study
About this Study 250+ respondents Half have 7 MM 10K+ workers workers 12th installment Aon Hewitt Retirement and Investment 5
Slide 6: Improving Financial Well-Being
Improving Financial Well-Being Aon Hewitt Retirement and Investment 6
Slide 7: Top Initiatives for Employers
Top Initiatives for Employers Top 5 The percentage of employers who are very likely to create or expand financial Initiatives well-being has been growing. 56% Create or focus on financial well-being of employees that expands beyond retirement decisions. 41% Measure the competitive position of the re
Slide 8: Financial Well-being Tools, Services, and Educational Campaigns
Financial Well-being Tools, Services, and Educational Campaigns Likely to Current Tool, Service, or Add in Prevalence Educational Campaign 2016 43% 34% Basics of financial markets Budgeting 78% 65% 55% of employers 33% Debt management 58% have at least 33% Financial planning 74% one topic 31% Health
Slide 9: The Link Between Financial Well-Being and Health and Wellness
The Link Between Financial Well-Being and Health and Wellness Likely to communicate to 26% workers the link between financial stress and health and well-being. 27% Are focusing on financial well- being in an effort to curtail health care cost 80% Have a unified wellness increases. strategy that inte
Slide 10: Why are Employers Adding More Financial Well-Being Programs?
Why are Employers Adding More Financial Well-Being Programs? 80% “Increase employee engagement” 85% of employers say “It is the right thing to do” Source: Aon Hewitt: 2016 Hot Topics in Retirement and Financial Well-being Aon Hewitt Retirement and Investment 10
Slide 11: Keeping Money Earmarked for Retirement
Keeping Money Earmarked for Retirement Aon Hewitt Retirement and Investment 11
Slide 12: Defined Benefit Plans: Stay the Course
Defined Benefit Plans: Stay the Course Close Freeze Terminate 6% 5% 4% of open, ongoing of open or closed of all DB plans are plans are very likely plans are very likely very likely to to close in 2016 to freeze in 2016 terminate in 2016 2016 appears to be a ‘status quo’ year for pension plan design
Slide 13: Pension Plans Continue to Feel the Pressure
Pension Plans Continue to Feel the Pressure Funded Status Hasn’t Improved 5%+ Average funded status for S&P 500 plans as of 12/31/2015 was 78% 3X 2% worse than 5 years Longer Life ago1 Expectancy Society of Actuaries issued new tables in 2014 with an updated -2% Rising PBGC Premiums PBGC premiums ha
Slide 14: Defined Benefit Plans: Few Lump-Sum Windows in 2016
Defined Benefit Plans: Few Lump-Sum Windows in 2016 6% 4% 56% 34% Plan on Plan on Already had Not interested having a having a a lump-sum in a lump-sum window in window in window window 2016 2017+ Source: Aon Hewitt: 2016 Hot Topics in Retirement and Financial Well-being Aon Hewitt Retirement and In
Slide 15: Defined Contribution Plans: Minimizing Leakage
Defined Contribution Plans: Minimizing Leakage Current Likely to Structural Changes Prevalence in 2016 Allow terminated employees to 42% 28% continue loan repayments Implement a waiting period 25% between loan payoff and 31% 77% of employers are 12% origination Reduce the number of loans available 2
Slide 16: Defined Contribution Plans: Distribution Options
Defined Contribution Plans: Distribution Options Automatic payment over an extended 12% period of time Of remaining group, 13% are very likely and 30% 29% are moderately Facilitate outside likely to add in 2016 annuity purchase Of remaining group, 2% are very likely and 16% are moderately likely to
Slide 17: Defined Contribution Plans: Barriers to Adding In-Plan Annuities
Defined Contribution Plans: Barriers to Adding In-Plan Annuities Percentage Listed as a Major Barrier 53% 43% 43% 40% 37% 34% 23% 21% 20% 10% Waiting to See Market Administrative Participant Utilization Cost Barriers Preference for Evolve More Concerns Concerns Participants Leaving the Plan Upon Ter
Slide 18: Navigating the Retirement Process
Navigating the Retirement Process Aon Hewitt Retirement and Investment 18
Slide 19: Anticipated Increase in Retirements
Anticipated Increase in Retirements 70% . of employers expect an increase in retirement eligible workers over the next 3 years Source: Aon Hewitt: 2016 Hot Topics in Retirement and Financial Well-being Aon Hewitt Retirement and Investment 19
Slide 20: Approach #1 to Deal with Increase in Retirement-Eligible Workforce
Approach #1 to Deal with Increase in Retirement-Eligible Workforce Increase level of Completed Recently: 19% automation, self-service, and/or web access Very Likely in 2016: Immersion in Technology 33% Moderately Likely in 2016: 44% Likely percentages are among those who have not completed recently
Slide 21: Approach #2 to Deal with Increase in Retirement-Eligible Workforce
Approach #2 to Deal with Increase in Retirement-Eligible Workforce Provide retirement Completed Recently: 14% planning education to near retirees Very Likely in 2016: 52% Moderately Likely in 2016: 35% Likely percentages are among those who have not completed recently Source: Aon Hewitt: 2016 Hot To
Slide 22: Approach #3 to Deal with Increase in Retirement-Eligible Workforce
Approach #3 to Deal with Increase in Retirement-Eligible Workforce Completed Recently: Increasing communication 13% about the retirement process Very Likely in 2016: 55% Moderately Likely in 2016: 32% Likely percentages are among those who have not completed recently Source: Aon Hewitt: 2016 Hot Top
Slide 23: Approach #4 to Deal with Increase in Retirement-Eligible Workforce
Approach #4 to Deal with Increase in Retirement-Eligible Workforce Completed Recently: Providing help with Social 11% Security planning Very Likely in 2016: 25% Politics and Public Policy Moderately Likely in 2016: 40% Likely percentages are among those who have not completed recently Source: Aon He
Slide 24: 2016 Is Shaping Up to Be the Year of Help
2016 Is Shaping Up to Be the Year of Help Keeping Funds Helping Navigate Improving Financial Earmarked for the Retirement Well-being Retirement Process 56% of employers are 45% of employers now 70% of employers very likely to create or allow workers to receive expect an increase in expand thei
Slide 25: Legal Disclosures and Disclaimers
Legal Disclosures and Disclaimers Investment advice and consulting services provided by Aon Hewitt Investment Consulting, Inc. (“AHIC”). The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not,
Slide 26: About Aon Hewitt
About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance an
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