MetLife's Pension Risk Behavior Index reaches all time high

The 18 investment, liability and business risks the study examines are as follows:

• Underfunding liabilities
• Asset and liability mismatch
• Accounting impact
• Asset allocation
• Liability measurement
• Meeting return goals
• Ability to measure risk
• Plan governance
• Fiduciary risk and litigation exposure
• Investment management style
• Decision process quality
• Investment valuation
• Longevity risk
• Quality of participant data
• Mortality risk
• Inappropriate trading
• Early retirement risk

For 2013, plan sponsors reported that underfunded liabilities and asset and liability mismatch respectively ranked as the first and second most important risk factors. The liability focus held steady as a constant concern as it has the last three years.

The survey also found that large plan sponsors are actively and collectively de-risking and 38 percent of smaller sponsors are following suit. Plan sponsors of all sizes are doing so in order to reduce liabilities, funded status volatility, contributions, pension expenses and cost of plan administration as a way to shift their focus back to core operations.

“De-risking — whether it’s through a partial risk transfer, pension buyout or some other risk mitigation strategy — can go a long way in achieving these objectives,” said Ed Root, vice president, U.S. Pensions, Corporate Funding, MetLife.

Plan obligations are increasingly becoming a considerable issue for senior management as the impact of plan liabilities on their balance sheets is requiring progressively greater attention. Over 50 percent of survey respondents indicated that key senior leadership pays close attention to plan obligations.