It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
Companies looking to reduce or eliminate pension risks through liability-driven investment, pension risktransfer solutions
NEWARK, N.J.--(BUSINESS WIRE)-- A survey of senior finance executives highlights the impact of rising healthcare costs on employee benefit programs. The report prepared by CFO Research services in collaboration with Prudential Financial, Inc. (NYSE:PRU), “The Future of Retirement and Employee Benefits: Finance Executives Share Their Perspectives,” shows a shift toward greater employee responsibility for making benefits choices, and for contributing to benefits costs.
The survey found an increasing number of employers expect to move to an “employee choice” benefits model over the next two years, giving employees greater responsibility for choosing the types and levels of benefits selected. “Just as employees have had to take on more responsibility for their retirement security, they will be taking on more responsibility for other benefits as well,” said James Gemus, senior vice president, Life/AD&D Products, Non-Qualified Benefits and Voluntary Benefits. “With these choices, employees will have more control over their benefits, to meet their personal needs.” The 2012 survey also suggests that many companies are closer to making decisions on the future of their traditional pension plans. In particular, financial executives are increasingly looking at pension risk transfer and liability driven investment strategies to reduce or eliminate defined benefit plan risks.
“Reinforcing what we are hearing from our clients, senior finance executives are looking at ways to limit the impact of benefits risks on their firms’ balance sheets,” said Christine Marcks, president, Prudential Retirement. “For their defined benefit plans, finance executives are increasingly likely to adopt liability-driven investment and pension risk transfer strategies. For their defined contribution plans, they agree that plans need to be enhanced and are looking more closely at retirement income and risk-mitigation products that will enable more employees to retire as planned.”
With respect to defined contribution plans, the survey indicates senior finance executives are exploring stable value products, guaranteed income products, and enhancements to target-date funds to improve participant outcomes, because they are concerned that employees are delaying retirement decisions due to inadequate savings.
The survey also finds that finance executives continue to recognize the value their companies’ benefits programs have for attracting and retaining talent. “Facing a difficult economic environment and rising healthcare costs, companies are looking at ways to manage costs and reduce risk across the benefits spectrum while ensuring they remain competitive,” said Sam Knox, senior vice president and director of research, CFO Research.
The survey was conducted from December 2011 to January 2012 by CFO Research Services in conjunction with Prudential Financial, Inc. Senior finance executives from a range of midsize and large U.S. companies were surveyed. The 2012 survey targeted companies that have defined benefit (DB) plans with $250 million or more in assets. One hundred eighty-six responses were collected from senior finance executives in a broad cross-section of company size and industry segments. Prior CFO Research/Prudential Financial, Inc. surveys were conducted in 2009 and 2010.
CFO Research Services is the research unit of CFO Publishing, LLC, a portfolio company of Seguin Partners. CFO Publishing is the leading business-to-business media brand focused on the information needs of senior finance executives. Delivering content through multiple channels including online, digital, mobile, and print, the business consists of CFO magazine, CFO.com, CFO Research Services, CFO Learning and CFO Conferences. CFO’s award-winning editorial content and loyal, influential audience make it a valued resource for its readers as well as an effective marketing partner for a wide range of blue-chip companies. CFO has long-standing relationships with nearly a million finance executives.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $943 billion of assets under management as of March 31, 2012, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. Prudential Retirement is a Prudential Financial business. Pension risk transfer products are issued by The Prudential Insurance Company of America (PICA), Newark, NJ. Guarantees are contingent on PICA's claims paying ability. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.
Prudential Financial, Inc.
Source: Prudential Financial, Inc.