Sixty-nine percent of CFOs polled thought that a plan’s rate of return was extremely important in measuring success, with the plan providing secure benefits (55%) and minimizing the impact on corporate finance (46%) following behind. Meeting employee expectations was far below others, with only 31% thinking that it was extremely important in measuring plan success.
In its survey of CFOs on pension issues and challenges, SEI investments also noted that CFOs are increasingly viewing pension systems as a threat to business. Seventy-six percent of CFOs are feeling the negative impact of their defined benefit (DB) plan on corporate finances, up from 61% last year. Sixty-two percent say that it has lowered profitability, while 29% say that is has created cash flow problems for their business.
Volatility seems to be a major frustration, with 78% citing volatility and unpredictability as the biggest burden in maintaining DB plans. Eighty-six percent feel that they do not have a high level of control over their DB plan’s impact on the company, and 96% said that is would be helpful to have a way to measure the long term impact of their pension decisions on company finances prior to making these decisions.
CFOs are spending more time on their pension plan too. Half of those polled said they spend more time dealing with their pension plan compared to two years ago, and 41% said this was distracting them from running their company.
The survey, sponsored by SEI Investments, was completed with 100 CFOs being interviewed. All those who are included had DB or cash-balance plans with assets of over $20 million.
More information is at http://www.seic.com/cfosurvey.pdf .