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Partner,
Aon Hewitt
Lincolnshire, Ill.

When a large client with more than $1 billion in pension assets spread across 18 pension plans decided last year to sell one of its three business segments, spin off a second, and manage a pension plan involving personnel from both the remaining segment and the spun-off segment, Mark Friedman knew exactly what to do.

As lead actuary for the client, Friedman knew that communication of the changes to employees, and educating workers and managers would be important facets of the successful completion of the projects, especially as it related to curtailment, settlement and special termination benefit accounting.

This project was particularly challenging in that each of the three business segments was taking a very different approach to the future of their pension plans. The executive terminations which led to settlements, the special termination benefits, and the termination and transfer of significant numbers of participants related to the spinoff created the need for elaborate and meticulous accounting.

Friedman developed a timeline spelling out the type of accounting required and his team's suggested timing. He also recommended actuarial assumptions, and outlined many of the technical elements that would benefit from advance auditor approval.

The timeline was updated throughout the process, and it provided an important framework for the accounting valuations.

In addition to his actuarial work, Friedman also serves as Aon Hewitt's national expert on total relative value comparative analysis for higher education institutions, as well as the firm's national resource for benchmarking in the financial services and transportation industries.

"Multiple times he's given us a heads-up on something that's not necessarily his responsibility to tell us about, but still, he's telling us," said a client. "He's very proactive."

Partner, Retirement Practice Leader
Aon Hewitt
New York

A large financial services organization recently decided to move its employee-benefits program away from a traditional final-average-pay plan that generally rewarded longer tenure employees but confused shorter-service employees. Noel Thomas, a partner and New York retirement practice leader with Aon Hewitt, therein saw an opportunity to save his client money, and to create a benefits program to rival programs held by the client's competitors.

Only a few of the client's competitors still offered a similar final-average-pay plan to their workers, and the client's 401(k) match was not in line with that of competitors because employees had to wait at least 10 years before they could receive a $1 for $1 match, while most competitors offer that match for new hires.

"Noel was instrumental in doing real actuarial analysis to help us determine what our best options were," the client said, "and also explaining what all the options were."

Thomas also eliminated the service-based match and replaced it with a safe-harbor design that provides $1 for $1 matching for all employees on up to 6 percent of pay. The new program now provides lump sum portability to employees and is easier to communicate and understand. Also, new hires will be automatically enrolled to improve employee participation and savings.

As a result of Thomas' exhaustive work in just a few shorts months, the client's new retirement program is expected to provide cumulative savings of at least $100 million over the next five years.

"The thing that struck me and stands out with me is the fact that Noel really understands the urgency of why you're asking and what you're asking," said another client. "That, to me, is something that is not always the case."