Improving funded status and controlling volatility are the top priorities among corporate defined benefit plan executives surveyed by SEI.
Managing duration, implementing a liability-driven investing approach using long-duration bonds and providing senior management with long-term pension strategies rounded out the top five priorities.
“The top four (priorities) are all along the same line,” Jon Waite, director of investment management advice and chief actuary for SEI Institutional Group, said in a telephone interview. “Pension plans are affecting corporate finances, and plan executives are asking, ‘What can we do about this?'”
Seventy percent of respondents said controlling funded status volatility was at least a “high priority” with 43% of those saying it was an “extremely high priority.” Improving the funded status of the pension plan was a “high priority” for 69% of respondents.
“It's not an easy solve for plan sponsors on funded status issues,” Mr. Waite said. “I would expect the top handful of priorities to remain for the next couple years.”
The survey asked executives to identify priorities and rank each as a “marginal,” “high,” or “extremely high” priority, and the survey assigned one, two, or three points, respectively, to the answers to measure the top priorities.
Making a first appearance to the top 10 this year was the need to implement an asset-allocation process aimed at exploiting shorter-term market efficiencies, according to SEI. It replaces the question on priority of looking at plan design, which appeared last year. Mr. Waite said plan sponsors understand that closing or freezing DB plans will not solve the funded status issue.
The third annual survey was conducted online in January among 50 corporate executives in charge of pension plans ranging from $250 million to $10 billion in assets. None is an institutional client of SEI.
A complete summary of the poll is available by e-mailing [email protected]