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5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
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CCH® PENSION — 10/08/09

Few Employer Changes In Retirement And Health Plans, Despite Rising Costs

From Spencer's Benefits Reports: Despite the economic upheaval, employer matching contributions were unchanged in 2009 in 90% of the 401(k) plans recently surveyed by Aon Consulting. Of the remaining plans that provide employer matching contributions, 3% increased their match and 7% decreased it. These are among the findings of Aon’s 2009 Benefits and Talent Survey, conducted in March 2009 with 1,300 participating employers.

The survey found that 95% of respondents regularly evaluate their defined contribution plan’s investment performance, 92% regularly evaluate plan investment and administration fees, and 76% evaluate participant investment performance. In the next 12 to 24 months, 41% of the plan sponsors plan to seek better performing funds, 17% plan to seek less volatile funds, 20% plan to add additional investment strategies, and 13% plan to seek less expensive funds. However, 39% of the respondents currently are considering keeping their present plan investments.

An increase in investment-related questions from plan participants was experienced by 63% of the plans in 2008, with 42% of the plans experiencing an increase of 0% to 25% in the number of questions. More than 85% of the plans agreed with the following statement: “Employees are delaying their retirements due to economic conditions.”

Defined Benefit Plans

Only 45% of the surveyed employers offer a defined benefit plan to their employees. Of those with a defined benefit plan, 92% were not considering making a change to their plan. Of those considering making a change, 71% said that their company-required contributions are too high, 47% said that volatility is too great, 35% said that administration of the plan is too expensive in terms of both time and money, and 24% said that competitors do not offer defined benefit plans to their employees.

The survey found that 26% of the defined benefit plans currently are frozen–15% are soft frozen (no new participants; existing participants continue to accrue benefits) and 11% are hard frozen (no new accruals by anyone). Of the frozen plans, 41% have frozen the plan to new entrants but intend to continue to maintain the plan for the foreseeable future; 20% plan to terminate the plan once funding allows them to do so; 25% do not have a strategy with regard to plan termination; 9% are considering redesigning both their defined benefit plan and their defined contribution plan to reflect the freeze, and 5% intend to “restart” the plan.

Health Care Plans

Even after changes were instituted in medical care plans, the total cost of medical plan rates increased in 81% of the plans in 2008 and 52% in 2009. Many plan sponsors have experienced a nearly 80% increase in health insurance premiums since 2002, Aon reported. “Respondents cite the cost of health care benefits as the second largest risk to their organizations, after market uncertainty,” the survey said.

Preferred provider organizations, including point of service (POS) plans, continue to dominate the offerings by the employers in the survey (92% offered them in both 2008 and 2009). HMOs were offered by 42% of the employers, while indemnity plans were offered by only 10% of the employers. Consumer-driven health plans (CDHPs) with health reimbursement arrangements were offered by 13% of the employers and CDHPs with health savings accounts were offered by 19% of the employers.

Only 11% of the employer plans do not require employee contributions for employee only coverage, and 3% do not require employee contributions for family coverage. Employer subsidies for employee only coverage were 90%-99% (18% of the plans); 85%-89% (12% of the plans); 80%-84% (24% of the plans); 75%-79% (17% of the plans); and less than 75% (19% of the plans). For family coverage, the employer subsidy was 90%-99% (8% of the plans); 85%-89% (10% of the plans); 80%-84% (20% of the plans); 75%-79% (16% of the plans); 70%-74% (12% of the plans); and less than 70% (31% of the plans).

Many respondents (41%) said that they expect to make more substantial changes to their medical program in 2010 than they did in 2009, with 67% considering increasing their deductibles, copayments, coinsurance, or out-of-pocket maximums and 56% considering the introduction or expansion of a wellness program.

A complete copy of Aon’s 2009 Benefits and Talent Survey can be found at


For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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