(updated with correction)
Underfunded liabilities are the most important risk facing U.S. corporate defined benefit plans, according to the 2011 MetLife U.S. Pension Risk Behavior Index survey.
Underfunded liability was selected as the most important of 18 different pension fund risk factors 66% of the time it was presented to 149 U.S. defined benefit plan executives in a survey conducted by Bdellium and Greenwich Associates between August and December.
Sixty percent of the times they were asked, respondents said asset and liability mismatching was their most important risk factor, while 45% of the times they were asked, asset allocation was the biggest risk factor.
In the 2010 study, corporate plan executives considered all risk factors fairly equal, and in 2009, plan sponsors were most concerned about the asset management part of the asset-liability equation, according to the 2011 report.
“With the top two risk factors on the liability side of the asset-liability equation, followed by two asset-oriented factors, we believe the asset-centric focus on investment returns that characterized the inaugural study in 2009 has given way to one that suggests that there is a growing interest on the part of plan sponsors to manage plan assets in the context of plan liabilities,” Cynthia Mallett, vice president in MetLife’s product and market strategies unit, said in a news release about the study.
