Ninety-three percent of Canadian public and corporate defined benefit plans had a long-term risk-management objective at the end of 2014, vs. 87% in 2013 and only 50% in 2009, said a survey by Aon Hewitt.
Half of the 100 Canadian plans surveyed by Aon Hewitt said their plan for reaching that long-term objective is "robust," and 37% identified cost stability as a long-term objective.
Also, 83% monitor asset performance, liability and funding levels on a regular basis
More than a third, 35%, said that they intend to increase their plans' exposure to alternative assets in the next 12 months, and 27% have delegated some or all investment responsibilities to a third party.
While both public and corporate DB plans might have the same risk-management objective, the reasons for their objectives differ, said William da Silva, senior partner and national retirement practice leader, in a news release on the survey.
"In both the public and private sectors, the focus on risk management is greater than ever before,” Mr. da Silva said. “In the private sector, plan closures and transitioning to defined contribution structures have largely already been done, but the search continues for new strategies to reduce or eliminate risk. In the private sector, the name of the game is liability settlement as plan sponsors are looking to eliminate defined benefit liabilities from their balance sheets through lump-sum offers and group annuities. In the public sector, there remains a commitment to the DB structure, but in a more sustainable manner.”
The plans surveyed by Aon Hewitt had a combined C$200 billion ($153 billion) in assets.
