Pension Plan De-Risking, North America 2015

Clear Path Analysis Ltd., Sponsored by Prudential

This industry insight report and survey examines the changing dynamics of the pension de-risking marketplace, as the pension risk transfer sector matures and alternatives to traditional liability-driven investment strategies come to the forefront.

The "Pension Plan De-risking User Survey," sponsored by Prudential, closely examines the views of 51 senior finance, treasury and pension professionals in the private sector to better understand their perspectives on pension de-risking in the current market environment. The survey confirmed that pension risk management remains a principal concern for many plan sponsors. Escalating longevity, ongoing market volatility, unpredictable funding requirements and asset/liability mismatch are all contributing to significant risk over the long term. In response, scores of plan sponsors are exploring de-risking options.

Survey Highlights

Included among the survey’s key findings:

  • 1 out of 4 private plans are considering transferring risk to a third party insurer in 2015.
  • Eighty percent of private plan sponsors are highly aware of longevity risk's impact on their pension liabilities. Larger plans have a much higher level of longevity risk awareness than smaller plans.
  • Half of private pension plan professionals disagree with the belief that companies are better off delaying the implementation of risk-management solutions to benefit from further improvements in the financial markets.
  • Seventy-six percent of private plan sponsors surveyed believe that movement in interest rates will impact their decisions.