Risk management a daily endeavor for companies with pension plans

Many buy-side financial institutions offer defined contribution plans for their workers. And according to a recent poll from Aon Hewitt, U.S. corporations who make these available to their employees are making sure that their risk management strategies are keeping these offerings protected.

More than three-quarters of companies with DB plans anticipate that they will modify equity exposure and how these assets are allocated in the course of the next 12 months, Pensions & Investments reported. The study, “2014 Hot Topic in Retirement: Building a Strategic Focus,” also revealed that more than 60 percent of sponsors will adjust their investments in order “to better match the characteristics of the plan’s liabilities” over the course of the upcoming year.

Rob Austin, director of retirement research at Aon Hewitt, told the business and investment online news resource that entrepreneurs take their DB plans very seriously, monitoring them by the day, in some cases.

“The most interesting [result in the survey] is how many employers are monitoring their plans’ funded status on a daily basis,” said Austin. “We’re seeing 12 percent of employers are doing that right now. From an actuarial standpoint, from a DB perspective, it wasn’t that long ago we did that once a year.”

He added that it’s clear employers want to be on top of their risk management procedures in regards to maintaining DB plan offerings, taking the appropriate actions as the market dictates.

“They want to be nimble,” said Austin.

It’s understandable why buy-side financial institutions take such a keen interest in risk management with their benefit offerings, considering how much the industry is worth. In a separate retirement funds survey performed by Pensions & Investments, total assets for the U.S.’ 1,000 largest retirement funds increased to $8.3 trillion on annual basis, up nearly 11 percent from last year. Defined benefit assets also rose to $5.6 trillion, an 8 percent uptick from year-ago levels.

Posts by Topics