A Watson Wyatt Worldwide news release said the top HR trends for 2006 include stepped up governance related to pensions and increased participation of plan members in pension decisions. “Not only will employers need to better manage pension risk, but plan members will demand a more active role in understanding and managing their own personal stakes in securing their financial future,” Watson Wyatt said.
Not only that, the Watson Wyatt consultants wrote, but progress will be made during 2006 toward resolution of the debates surrounding defined benefit (DB) pension plan funding rules. “Potential new rules resulting from Federal and Quebec pension discussion papers will be tabled to help ensure a fairer balance between the needs of plan sponsors (particularly investment grade companies and public sector plans that are unlikely to fail in the shorter term) and today’s plan members, as well as the next generation of potential plan members who are often overlooked in the debate,” the consultants said.
In the pension investment arena, market conditions will continue to be difficult for pension funds, the study said. Long-term interest rates will remain historically low, with only a marginal increase at best, and equity risk premiums will remain at current levels. Also, there will be much debate regarding how to act in light of the removal of foreign content limits.
“On the whole, we expect to see a recurring theme of employers working more closely with employees in the decisions that affect the employment deal. Organizations and their people will move further toward a true partnership that emphasizes total rewards and helps positively affect bottom-line results,” said Michel Guay, managing director, Watson Wyatt Canada, in the news release.
Finding Top Talent
Watson Wyatt said other top 2006 workplace issues on its list include a continuation of the battle to attract and maintain top talent. The consultants asserted, “As the population ages and the economy gains further momentum, progressive employers will start to think more holistically about talent management – not only to attract and retain employees, but also to ensure employees are productively engaged in their work and make a positive contribution to the organization’s bottom line.”
Also, Canadian firms are forecast to continue migrating toward a pay-for-performance philosophy. “Due to increased scrutiny by shareholders and demands for greater disclosure/transparency of executive pay packages, companies will move even further toward ensuring a strong link between pay and performance, and more transparency regarding this relationship. There will also be increasing pressure on directors’ compensation, given the restricted talent environment, and increased accountabilities, time requirements and potential liabilities,” Watson Wyatt said.
Finally, progressive employers will realize the opportunity costs of not taking action to manage mental health and workplace disability issues and put practices in place to improve workplace health and employee productivity.