U.S. employers are taking a wait-and-see approach to theirretirement programs. Of the more than 1,300 employers surveyed byAon Consulting, more than 90 percent are not changing theirretirement plans, either in terms of benefits or management.

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Both employers and employees are waiting for an economicrecovery before moving forward with retirement.

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"The 'wait-and-see' attitude is not surprising," said AmolMhatre, senior vice president responsible for retirement innovationwith Aon Consulting. "We may continue to see dramatic economicswings, as interdependencies grow in the global economy, andretirement programs and savings can't stop with every downturn.

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Retirement security for working Americans will soon become achallenge for policy makers and employers, along the lines ofhealth care reform. With a trend toward individual responsibility,increased mobility, complex investment choices, rising cost ofhealth care and improved life expectancy, employers may have to domore to help workers understand and plan for their retirementneeds."

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Eighty-seven percent of respondents said employees are delayingtheir retirement due to economic conditions. A third of employershave less than 70 percent of their employees enrolled in theirdefined contribution (DC) plans, with the majority (67 percent)saying they believe workers are not enrolled because they can'tafford it.

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Almost 40 percent of employers believe employees don't knowenough about funds needed for retirement, but these employees areincreasingly turning to their employers for answers. Sixty-fourpercent of respondents said there was an increase ininvestment-related questions from employees in 2008 versus 2007.However, only about a third of these organizations increased theircommunications around the importance of saving for retirement lastyear, while 62 percent said their communication remained unchangedfrom the previous year.

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More than 90 percent of organizations are also not changingtheir pension/defined benefit programs. These respondents cited thehigh cost of company-required contributions (71 percent),volatility (47 percent) and administrative costs (35 percent) asthe main reasons.

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The survey also revealed that only 45 percent of employers offera DB plan to their employees. That said, 41 percent of employershave frozen their pension plans to new entrants, 25 percent havefrozen their plans entirely and do not have a strategy regardingplan termination, and 20 percent have frozen their plans and intendto terminate the plan once funding allows.

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"We do not subscribe to the 'wait-and-see' attitude foremployers with frozen pension plans," said Kemp Ross, senior vicepresident with Aon Consulting and head of Aon InvestmentConsulting. "Employers have no real upside for taking on thefinancial risks and costs of frozen pension plans, so organizationsneed to establish an exit strategy for such plans, which can beexecuted with a balanced approach to funding and investments duringthe next few years, as financial markets recover."

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As for defined contribution plans like 401(k)s, 56 percent ofemployers offer matching contributions. Of those, approximatelyhalf provide a higher than 3 percent match. Additionally, 41percent of employers have an automatic enrollment plan, with 53percent implementing a default at 3 percent, and nearly all (99percent) planning to keep their default percentage the same thisyear.

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"While most of our survey respondents did not cite changes tomatching contributions, some financially constrained companies didsuspend or modify their 401k match in response to the economicdownturn," said Mhatre. "Companies should take this opportunity tolook strategically at their retirement programs in the context oftotal reward strategies.

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"Defined contribution plans are increasingly the primaryretirement vehicles for American workers. This will surely changehow workers and policy makers view companies' fiduciaryresponsibilities. We had a third of survey respondents suggest thattheir fiduciary risks have increased since only a year ago. It issurprising that most companies have not taken actions to mitigatesuch risks by taking measures such as fiduciary training and reviewof their governance processes."

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