(updated with correction)
Defined benefit pension plans with $100 million to $1 billion in assets are focusing more on derisking than on generating returns, according to Vanguard.
In a survey of executives of Vanguard’s midsize plan clients, 85% rated risk as very or extremely important, with 85% citing concerns about interest rate risk and 80% concerned about risk in equity markets. In contrast, 56% of respondents were focused on meeting a return hurdle.
Fifty-two percent plan to increase their allocations to fixed income, reduce equities and implement an LDI strategy.
Four in 10 plans surveyed said they had a funded status less than 80%.
Evan Inglis, Vanguard chief actuary and author of the report about the survey, said in a telephone interview that the larger the plan relative to financial measures, including market capitalization, revenue and balance sheet assets, the more likely it is to derisk.
The results of the survey of about 160 DB plan sponsors in summer 2010 were included in the Vanguard report, “Pension Plan Sponsors Shift Focus from Return to Risk Control.”