For the fourth year running, corporate pension plan sponsors are making controlling funding status volatility a top priority, an SEI quick poll has found.
Plan sponsors also identified the need to implement risk reduction strategies with 63% of participants selecting liability-driven investing as their top method for reducing risk. Forty-eight percent of poll participants said they would consider lump sum payments to term-vested participants. Annuitization ranked as the least popular risk reduction strategy at 14%.
“Having felt the impact of low interest rates on their pension liabilities again last year, many plan sponsors will focus on risk management and liability reduction strategies to combat volatility and improve plan funding in 2013,” said Jon Waite, director, investment management advice, and chief actuary with SEI’s institutional group. “As pension investment management grows in complexity, plan sponsors are seeking more sophisticated strategies to reduce pension risks and mitigate the impact of pension expense on overall corporate finances.”