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CANADIAN INDUSTRY ONLINE - JANUARY 2012
DEFINED BENEFIT PENSION PLAN
SPONSORS FACE HIGHER
CONTRIBUTIONS IN 2012 AS
SOLVENCY RATIOS DECREASE
** NEWS COURTESY OF CANADA NEWSWIRE
MANAGING RISK FACTORS HELPS
IMPROVE FUNDED STATUS
TORONTO, Jan. 6, 2012 /CNW/
- Many employers that provide a
defined benefit (DB) pension plan
for their employees may find
themselves having to double their
contributions or more, this year in
order to meet solvency requirements,
according to Aon Hewitt, the global
human resource consulting and
outsourcing business of Aon
Corporation (NYSE: AON). The
median pension solvency funded
ratio - the ratio of the market value
of plan assets to liabilities - is
approximately 15 per cent lower this
year than at the start of 2011 due to
lower interest rates and the stock
market decline. With the solvency
position of these plans only in the
68 per cent range - down from
around 83 per cent a year ago - plan
sponsors that will file an actuarial
valuation this year will need to add
extra funds to comply with
minimum funding rules that assure
DB plans can meet their pension
promises. As a result, employers
may be pressing pension regulators
for further funding relief, if such
relief has not already been granted.
Not all DB plan sponsors find
themselves having to increase their
contributions, however. “Organiza-
tions that have taken steps to
manage their plan’s risk exposure
are likely better funded,” said Tom
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