According to a news release from SEI, a provider of asset management services and investment technology solutions who sponsored the poll, 62% of respondents said their companies were not fully prepared for the impact of pension reform. Fifty-six percent of those polled said their companies had already frozen or terminated their pension plans or will consider doing so in 2006.
The trend of freezing a defined benefit plan and switching to a defined contribution plan continued this week with an announcement from Nissan (See Nissan Follows Trend of DB to DC Switch ).
“Executives know they can’t just make the problems go away, so instead they are viewing the events of this year as an opportunity to evaluate the overall management of their pension plans,” said Jim MorrisSenior Vice President, Retirement Solutions for SEI Global Institutional Group, in the release. Pension reform measures were passed in both the House (See Pension Protection Act Approved by the House) and Senate (See Senate OKs Compromise Version of Pension Reform Measure ) in 2005.
Aside from the effects of pension reform, 32% of executives polled felt the pension plan has become a distraction and in some cases hampers organizational efforts to focus on core competencies. The majority (78%) said they have received inquiries from their Board and/or CEO regarding the long-term pension strategy, and 72% say they are reevaluating current processes and plan management. Thirty-one percent no longer view the pension plan as a strategically necessary benefit.
Results of the poll were based on responses from 151 executives responsible for managing defined benefit plans ranging from $25 million to over $3.5 billion in assets. A copy of the poll summary can be obtained by emailing email@example.com .
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