DB for those who want guarantees

25 September 2008
| By By Mike Taylor |

While Australia appears to have firmly embraced a defined contributions regime for superannuation, the World Economic Forum and Mercer are arguing that defined benefit plans will continue to command a strong place in developed countries.

In an analysis flowing from the forum, Mercer said it had observed that under a ‘winners and the rest’ scenario, favoured employees in developed countries would have good defined benefit security while, under the ‘you are on your own’ scenario, participants would end up bearing the risk and taking the consequences.

It said that many people under the ‘you are on your own’ scenario might face deferring retirement.

“But defined benefit plans, whether in a familiar or a different form, will have a place in the infrastructure of future retirement provisions because we humans like guarantees,” the Mercer analysis said.

The Mercer analysis also looked at workforce planning and suggests that employers need to make provision for an ageing workforce.

“Mercer believes employers should consider a number of steps to accommodate an ageing workforce, including rehiring retirees for periods of peak activity, establishing wellness programs targeted at mature employees, considering phased retirement programs, developing talent pools in feeder jobs to critical positions, and implementing retention plans focused on identified at-risk groups,” the analysis said.

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