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Contact: Mercer Feedback

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United States
New York , 1 March 2010

Many employers in the US have frozen their defined benefit (DB) pension plans, and some are thinking about terminating them altogether. Other employers are not sure that termination is the right direction, but are looking for a way to develop and implement a course of action going forward. To help employers better assess, implement and monitor (AIM) the frozen plans through to possible termination, Mercer has developed a new solution, ”AIM to Exit.”

Frozen pension plans present a unique set of management challenges. Freezing the plan does not eliminate financial or compliance risk. A pension plan that has been frozen can no longer be used as a key attraction and retention tool by employers, yet investment oversight and plan administration continue to be their fiduciary obligations.

Mercer’s new offering provides a set of comprehensive and integrated processes that enable sponsors of frozen pension plans to identify their most appropriate “exit strategy” and work to achieve their objectives over their desired time horizon.

”AIM to Exit” utilizes two concurrent processes:

• Financial Strategy and Execution to determine the exit or plan maintenance strategy, fund the plan, manage risk and execute effectively
• Administration and Compliance Readiness to identify and address administration challenges, gather participant information and maintain documentation

Successful application of Mercer’s AIM approach can help bring a plan to the desired end state, which may include final termination. The steps involved in terminating a plan through this process can help ensure that all final requirements are met, such as compliance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, and completion of final benefit distributions, including annuity placement.

As the “AIM to Exit” name implies, these processes include detailed steps to assess, implement and monitor the plans through termination. “AIM to Exit is the next generation of the Mercer Frozen Plan Solution, which was introduced in 2006 when the trend of freezing plans was just picking up steam. That trend has only escalated, and more employers have begun considering their plan termination alternatives,” said Richard McEvoy, a partner in Mercer’s retirement, risk and finance business.

“Readying a plan for termination involves ensuring that assets are sufficient to pay the benefits and that all administrative loose ends are tied up,” added Mr. McEvoy. “Plans aiming for termination have to worry about investment volatility and maintaining spotless participant information.”   

Mercer’s dedicated group of experienced professionals can manage all aspects of plan termination, from setting the strategy through final settlement. These professionals include financial and investment management specialists, dedicated annuity placement staff, administration resources and plan termination and compliance experts.

More information about Mercer Frozen Plan Solution…AIM to Exit can be found on Mercer’s website by listening to the recorded webcast or by contacting a local Mercer representative. 

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. 

For more information, visit www.mercer.com.  

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Contact: Mercer Feedback