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Protect Your Balance Sheet
The devastating economic impact of COVID-19 is rapidly unfolding. How do you move your business forward during this unprecedented volatility? Through a healthy balance sheet. It has never been more critical to reduce the risk to the balance sheet, and you must do so while navigating the complexity of predicting all possible scenarios in a shifting environment. Where to begin? Finance and HR teams must work closely with all departments to enable a holistic approach.
Expand and Strengthen Your Risk Management Strategy
Reduce Health Plan Liabilities
Mitigate Retirement Plan Risk
Expand and Strengthen Your Risk Management Strategy
The coronavirus pandemic presents a unique threat — impacting your business and potentially limiting recovery options. To protect your business from multiple threats, you must adopt a holistic approach. Using a macro-perspective and sophisticated analytics, expand and strengthen your strategy for understanding, identifying, and mitigating overall risk. Learn more about analyzing the maturity of your organization’s risk management strategy.
Mitigate Retirement Plan Risk
Maintaining retirement plans involves risk and can impact the health of your balance sheet. Offset continued economic uncertainty and financial challenges posed by COVID-19 with a new approach.
Evaluate the benefit of transferring pension risk, either via lump sum, which removes the liability right away, or via annuity, which does so over time. In the U.S. in 2019, the IRS made changes to re-allow retiree lump sum as a risk-mitigating option. However, the COVID-19 pandemic poses some unique challenges in forecasting the financial and operational effects of a retiree lump sum window.
In 2019, the U.S. pension risk transfer market continued to grow with 506 transactions made, totaling $30 billion in premium.
Integrate Your Risk Identification, Analysis, and Management Disciplines
Since 2007, more than $16.2 billion in pension liabilities have been transferred in Canada.
55% of U.S. employers are very likely to or have already implemented lump sum windows.
Reduce Health Plan Liabilities
While a healthy workforce is more critical than ever, health plans for active and retired employees can be a liability on the balance sheet. Identify health plan risks and take action to reduce related liabilities and ensure long-term business sustainability.
De-Risk the Volatility of Active Health Plans
Manage Rising Disability Costs
Learn More About Protecting Your Balance Sheet
The ramifications of the pandemic continue to unfold, but with the right strategies, you can successfully move your business forward. Consider relying on an expert partner with a holistic approach as you reevaluate your risk management strategy and focus on reducing retirement and health plan risks and liabilities. Our expertise and resources in commercial risk management, retirement and investment, and health make us uniquely equipped to help you protect your balance sheet and strengthen your business for the future.
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Explore Our Research and Insights
The first step is to optimize the way you communicate, share accountability, and develop strategy to gain an enterprise-wide perspective of risk.
Ensure consistent and routine risk reporting throughout the organization.
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Use Data Analytics and Benchmarking to Make Better Decisions
Move Pensions off the Balance Sheet
Manage Pension Liability
Move Pensions off the Balance Sheet
Manage Pension Liability
Over 70% of U.S. employers monitor their pension risk (funded status) at least quarterly, with over 40% monitoring at least monthly.
46% of Canadian employers monitor their pension risk (funded status) at least quarterly. Although annual monitoring is still the most common practice, we expect this to change in light of the COVID-19 risk.
33% of U.S. employers are very likely to or already have partially settled liabilities with liftouts.
Choosing to keep your pension plans? Re-evaluate your risk management approach and ensure your investment strategy is nimble enough to take advantage of market opportunities.
For U.S. employers, providing health benefits to retired employees represents a significant and unnecessary liability on your balance sheet. Migrating Medicare-eligible retirees from your existing plans to individual Medicare supplement or Medicare Advantage plans reduces costs, improves retiree health coverage, and reduces your overall liability.
Migrate U.S. Retirees to Medicare
Migrate U.S. Retirees to Medicare
Reduce your retiree medical spend by 20 to 50%.
Help retirees save $1,000 per year.
Manage Rising Disability Costs
The incidence and duration of disability claims are on the rise and related costs are increasing. A formal disability policy provides a clear and equitable approach, mitigates risk in the event of conflict, and supports a sustainable and cost-effective program valued by employees.
95% surveyed provide long-term disability income protection for an employee who is totally disabled for an indefinite period.
De-Risk the Volatility of Active Health Plans
Self-funded employers are likely to see extreme fluctuation in health costs due to COVID-19. For active employees still on your health plan, reduce liability further by de-risking health cost volatility.
In the U.S., reduce your annual growth rate of healthcare spend from 5% to 2.7% per employee.
Integrate Your Risk Identification, Analysis, and Management Disciplines
Foster a culture of risk ownership that encourages full engagement and accountability at all levels of the organization.
Use Data Analytics and Benchmarking to Make Better Decisions
Then, gather the tools and data needed to identify and understand your organization’s risk.
Identify existing and emerging risks using internal and external data and information.
Collect and incorporate operational and financial risk information to inform decision making and governance processes.
Use sophisticated quantification methods to understand risk and demonstrate added value through risk management.
Integrate Your Risk Identification, Analysis, and Management Disciplines
Use Data Analytics and Benchmarking to Make Better Decisions
Engage key stakeholders in risk management framework development and policy setting.
28% of companies aim to terminate plans at the lowest economic cost and transfer the liabilities from the balance sheet.
14% of Canadian private sector sponsors are very likely to have or have already purchased annuities to remove liabilities compared to 20% public sector sponsors.
63% of employers are considering Medicare options for their retiree population.
Starting in 2021, U.S. employers can benefit from the repeal of the federal Health Insurance Tax — saving you and your employees up to 3 percent on premiums.
Despite the risk, only about half of Canadian employers surveyed have a formal disability policy.
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Explore Our Research and Insights
Source: Aon’s 2019 Global Pension Risk Survey
Source: Aon Retiree Health Exchange
Source: Aon Retiree Health Exchange
Source: Aon’s 2019 Global Pension Risk Survey
Source: Aon’s 2019 Global Pension Risk Survey
Source: Aon’s 2019 Global Pension Risk Survey
Decision Making in Volatile Times
Protect People and Assets
Protect the Balance Sheet
Maintain or Increase Revenue
Cost Management
Revisit
Business Strategy
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New Ways to Increase Revenue
Decision Making in Volatile Times
Protect People and Assets
Protect the Balance Sheet
Maintain or Increase Revenue
Cost Management
Revisit Business Strategy
EN / FR
Share the Insights:
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Learn More About Protecting Your People and Assets
Strengthen Your Balance Sheet
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