Pension Design Planning Growing in Importance

September 23, 2008 ( - Retirement plan design issues will grow increasingly important in years to come in light of the aging population and continued difficulties in funding Social Security, a new study asserted.

A news release from Mercer and the World Economic Forum said the study examined three pension design scenarios:

  • “The winners and the rest” – a scenario researchers said provides that favored employees in developed countries will have good DB benefit security.
  • “We are in this together” – where government safety nets will be important in the event of market downturns; and
  • “You are on your own” – where participants will end up bearing the risk and taking the consequences. Many in this scenario will postpone retirement, Mercer contended.

“But DB plans, whether in a familiar or different form, will have a place in the infrastructure of future retirement provisions because ‘We humans like guarantees'” Mercer wrote. “As the harsh realities of funding a traditional social security system for an aging population are hitting home in many countries, collective thinking in the planning of future pension policies may help to develop systems that produce more equitable and adequate benefits whichever way the world goes.”

class="NormalIndent2"> In addition to pension issues, the study found that it was likelythe funding and provision of health care will become increasingly the responsibility of the private sector and that multinational employers in particular will be forced to play a large and potentially crucial role.Governments almost universally are shifting the responsibility for funding and, in some cases, provision, of health care to employers or individuals.

class="NormalIndent2"> In general, the study report asserted that it is more important than ever for employers to include an assessment of demographics in their workforce planning. Workforce planning involves identifying and avoiding potential workforce skills gaps and bottlenecks in key career paths.

class="NormalIndent2"> Mercer said employers should consider a number of steps to accommodate an aging workforce, including:

  • rehiring retirees for periods of peak activity,
  • establishing wellness programs targeted at mature employees,
  • considering phased retirement programs,
  • developing talent pools in feeder jobs to critical positions, and
  • implementing retention plans focused on identified at-risk groups.

class="NormalIndent2"> The World Economic Forum report can be downloaded at .

class="NormalIndent2">Additional information from Mercer is at .