US - Mercer Human Resource Consulting has introduced a new retirement solutions product to meet the evolving needs of both businesses and employees.
The Retirement Shares Plan is similar in design tovariable benefit plan. Employees earn Retirement Shares in the same manner as in acareer-accumulation pension plan. A typical plan provides a benefitformula of 1% of pay each year. At the end of the year, the 1% of payis used to buy Retirement Shares at their end-of-the-year value. Theshare value is determined based on the value of the retirement trustassets.
By offering two classes of Retirement Shares, a plan can then allow the employee or retiree to customise the degree of risk and potential growth right for them, at the same time as freeing them from the burden of selecting individual investments.
The retirement share funds are selected and monitored by the plan sponsor and professionally invested. Unfunded liabilities are then minimised because the liabilities and assets are always matched, making sure the plan stays essentially fully funded at all times.
Asghar Alam, the leader of Mercer's US retirement business, said: It offers the employee the security of post-retirement income and the potential to grow with equity markets and to receive inflation protection.”
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