U.S. corporate plan executives and their U.K. trustee counterparts both grade their risk management performance as a “B” — grading it 80 out of a possible 100 — but trustees focus on different issues in each country, according to a MetLife survey.
While surveys in both countries found the No. 1 risk issue to be measuring liabilities, that’s where the similarities ended, according to “Comparing Pension Risk Attitudes and Aptitude in the United Kingdom and United States,” a report based on the surveys’ results. For example, while U.K. respondents ranked longevity risk second, U.S. respondents placed it 10th out of 18 choices. Plan governance ranked third in the U.S. but 12th in the U.K.
“Despite the widely held assumption that the U.S. and U.K. pension markets are, for the most part, virtually identical, the way that pension risk factors are prioritized is very different,” Dan DeKeizer, CEO of MetLife Assurance, the U.K. subsidiary of MetLife, said in a news release accompanying the report. “In part, this can be explained by how, historically, assets rather than liabilities have been the main focus of pension scheme management in the U.S., and also by the different frameworks and structures of the regulatory regimes in place.”
However, pension fund officials in both countries are “developing a broad view of pension risk management” and “believe that their risk management practices are appropriately focused on higher risks,” Mr. DeKeizer said in the release.
The report is based on responses from 166 U.S. and 89 U.K. corporate plan officials and is available at www.metlife.com/pensionriskusuk.
