2010 is all about Pension Funding Volatility Controls

February 11, 2010 (PLANSPONSOR.com)When defined benefit pension sponsors peer into their crystal balls for the rest of 2010, most see their continuing efforts to get a handle on their plan’s funded status volatility.

An SEI news release said 91% of sponsors polled identified the volatility issue as a key goal for the year, while 33% of respondents went a step further to identify it as an extremely high priority.

Meanwhile, according to SEI,  90% of respondents cited developing a strategy for improving their funded status as a priority in 2010,  with 71% saying it was at least a “high” priority.

“As pension plans continue to negatively impact organizational finances, all of these strategies should be priorities this year, but successfully executing them will be a significant challenge,” said Jon Waite, Director, Investment Management Advice and the Chief Actuary for SEI’s Institutional Group, in the news release.

Additional priorities cited in the poll include:

  • Providing senior management or their Board with a long-term pension strategy;
  • Gaining the ability to most effectively manage duration;
  • Conducting an asset-liability study;
  • Implementing a Liability Driven Investing (LDI) approach using long-duration bonds;
  • Stress testing the portfolio to gauge its ability to withstand extreme macro economic environments;
  • Evaluating a different approach for investment management;
  • Changing funding policies and timelines; and
  • Defining fiduciary responsibilities for trustees and investment consultants.

The poll was completed by 54 executives who oversee pensions ranging from $250 million to $10 billion in assets.

Summaries of the poll are available by emailing seiresearch@seic.com