For the fourth consecutive year, Aon Consulting surveyed employers across the United States to examine their benefits and talent management practices and challenges. Conducted in March 2009 during a period of unprecedented economic change, the survey drew more than 1,300 participants. In this report, Aon Consulting's 2009 Benefits and Talent Survey, we examine the data in three areas, offering highlights here.

1.) Health Risks and Benefits

Although health care and medical trends declined modestly since 2008, plan sponsors continue to investigate programs to help reduce the costs of their health care spending, which continues to increase faster than the general rate of inflation.

There are two ways they're going about this: First, they're looking for ways to cut costs in the near-term. And second, they're analyzing the root cause of their overall health care spending (e.g., chronic illness, obesity, etc.) to address costs over the long-term.

One cost-reduction tool that many employers consider important is voluntary benefits. Nearly two-thirds (65 percent) of respondents use or are considering using them as a way to offset employee out-of-pocket costs. Forty percent are considering voluntary benefits as a way to offset the bad news of a benefit cost increase or benefit reduction. And 28 percent are considering them as an option when replacing an employer-provided benefit.

Another area of growing interest is wellness programs. The number of employers who offer consumer-directed health plans, which encourage employees to take a more active role in their health care decisions and adopt healthier habits, increased from 27 percent in 2008 to 32 percent in 2009.

Be proactive

Even with the provisions of health care reform unknown, employers can and should take action to reduce their benefit plan costs. Your short-term focus should be on identifying opportunities to quickly reduce plan costs through audits and vendor negotiations. Longer term, this is an ideal time to:

• Look for industry-specific benchmarking data to get a 360-degree perspective on whether your health care programs are competitive.
• Make significant investments in businesswide wellness and prevention programs to encourage a focused, engaged, and productive workforce that will create a competitive edge in a growing, global business and labor market.

2.) retirement paradigm shift

The vast majority of survey respondents are not changing their retirement programs in response to the economic downturn, according to the 2009 study.

Most defined contribution (DC) retirement plan sponsors have not made changes to their benefits, with 90 percent reporting no change in 2009 contribution levels compared to last year. Even more surprising, 92 percent of respondents who sponsor defined benefit (DB) plans said that they are not making any changes to their DB plans.

Nonqualified retirement plans continue to become more prevalent, particularly among large employers. While the turmoil in financial markets highlights the financial volatility of pension plan costs, two-thirds of respondents continue to employ traditional investment strategies and take investment risks, with most sponsors appearing to take a wait-and-see attitude.

Retirement or pension plan sponsors are generally confident that they are managing and administering DC plans well, with more than 90 percent evaluating plan fees, expenses and investments. However, sponsors are significantly less confident about their employees' ability to understand retirement needs and plan for retirement. Close to 90 percent of respondents feel that employees are delaying retirement in light of the economic downturn.

TAKE ACTION

A clearer picture for defined benefit retirement plans may emerge as more plan sponsors evaluate and implement alternative retirement programs in response to the financial market turmoil. However, in the short term, it is understandable that plan sponsors may be less willing to change their investment policy given the high cost of funding their pension deficit. That said, we do not subscribe to the wait-and-see approach that many are taking and maintain that companies should be actively managing their pension risks.