Finally get that promotion? Get exclusive content, tips and tools to help you excel.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Market volatility is causing plan sponsors to identify underfunding of liabilities as the most important risk affecting their defined benefit pension plans. However, this risk is reported as only the 11th most successfully managed risk—demonstrating that the importance ascribed to certain risks does not always correlate to success at managing them, according to MetLife's 2011
Comparing Pension Risk Attitudes and Aptitude report, which compares and contrasts the results of the MetLife 2011 U.S. and UK Pension Risk Behavior Studies.
The studies surveyed plan sponsors in the U.S. and trustees in the UK regarding 18 investment, liability and business risks to which their plans were exposed.
Gap Between Importance and Success
The economic downturn and subsequent volatile economic environment are leading plan sponsors to focus more intensely on their plan’s liabilities. “This marks a fairly significant turning point away from seeing absolute asset performance as a key driver of meeting pension obligations and moving to managing assets in the context of plan liabilities,” said Cynthia Mallett, vice president for corporate benefit funding at MetLife, a financial services and employee benefits provider.
Other risks also were identified as highly important but reported to be low in successful management, even though they should garner more attention than risks that are identified as low in importance but reported to be managed successfully. For instance, a mismatch between plan assets and liabilities was ranked as the second highest risk affecting pension plans. However, it was reported to be only the 13th most successfully managed risk in the U.S.
“The good news amid a challenging economic environment is that plan sponsors are tackling the measurement of their liabilities. This is the first step in successfully managing the risks facing their plans,” said Mallett. “Moving forward, we expect plan sponsors to refine and deepen their focus on a core set of risks, and over time to implement new strategies to successfully manage them.”
2011 Risk Factor Importance and Success Rankings
Underfunding of liabilities
Asset & liability mismatch
Meeting return goals
Ability to measure risk
Fiduciary risk & litigation exposure
Decision process quality
Investment management style
Quality of participant data
Early retirement risk
is an online editor/manager for SHRM
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
HR Education in a City Near You
SHRM’s HR Vendor Directory contains over 3,200 companies