Pension plans will continue investing in alternative assets and governments will slowly shift some of the financial burden of healthcare to employers, according to a forecast by Watson Wyatt.
In its top workplace trends for 2007, the consulting firm expects a number of trends to arise regarding pensions, health and wellness, and executive compensation. Here are its predictions:
Pensions
Healthy pension fund returns in 2006, in addition to large employer contributions and increased long-term bond yields over the year should translate into improved funded ratios. Pension plans will also continue to receive some relief from low long-term interest rates. To try and prolong the benefit of these trends, plan sponsors will seek a greater match in the movement of plan assets and liabilities.
The CICA will announce changes in the first quarter of 2007 to parallel the changes made to U.S. pension and other post-retirement benefit accounting rules. This will impact the net worth of companies offering post-retirement defined benefit (DB) plans as they begin to recognize the funded status of their plans on the balance sheet as early as the end of 2007.
Pension funds will keep expanding their exposure to alternative assets, such as real estate, infrastructure and hedge funds.
Health & wellness
Governments will slowly shift some of the healthcare financial burden to employers and to better manage higher costs, organizations will start to implement benefits programs that make employees more active consumers in the process.
Stress, anxiety and depression will continue to affect workforce health in 2007. To manage their disability costs and at-work lost productivity, companies will take a wider focus and improve their organizational practices and culture to influence workforce health.
Executive compensation issues
Following new reporting requirements released by the Securities and Exchange Commission in the United States, Canadian securities regulators are committed to the distribution of new draft rules for executive compensation disclosure early this year. Employers will spend most of the year responding to these rule changes and examining compensation practices in light of what are sure to be more transparent disclosure reporting requirements.