Controlling Volatility Still Top of Mind for DB Sponsors

February 8, 2011 (PLANSPONSOR.com) - An SEI Quick Poll has found that, for the second consecutive year, pension plan sponsors say their number one priority for the coming year is finding a way to control funded status volatility.

Four out of five (84%) poll participants view this as a priority, with more than three-quarters (76%) identifying it as a “high priority,” making it the highest ranked priority in the entire poll.   

While controlling funded status volatility came in as the top priority, providing senior management with a long-term pension strategy took second, moving up one spot from last year, with more than three-quarters (76%) of participants listing this as a top priority.   

According to a press release, the top 10 priorities are: 

• Controlling funded status volatility; 
• Providing senior management with long-term pension strategies; 
• Improving plan’s funded status; 
• Conducting an asset-liability study; 
• Effectively managing duration moving forward; 
• Implementing a Liability-Driven Investing (LDI) approach using long-duration bonds; 
• Defining fiduciary responsibilities for trustees and investment consultants; 
• Changing funding policies and timelines; 
• Stress-testing the portfolio to gauge its ability to withstand extreme macroeconomic environments; and 
• Implementing a plan design change, such as closing the plan to new entrants or freezing accruals in already closed plans. 

Defining fiduciary responsibilities for trustees and investment consultants moved up two spots from last year, with nearly two-thirds (64%) of participants listing this as a priority.   

The second annual “Top Priorities for Pension Plan Sponsors” Quick Poll was completed by 50 executives overseeing pensions ranging from $250 million to $10 billion in assets. None of the respondents were institutional clients of SEI.  

Rebecca Moore
editors@plansponsor.com