Nearly 30% of defined benefit plans are planning or at least weighing the option of a risk transfer this year, according to a study commissioned by Prudential. That represents a shift in attitudes toward de-risking, as the U.S. industry has historically been cautious about de-risking measures, according to Prudential.
More than a third of closed pension plans and 27% of private open plans are considering transferring risk to a third party, according to the report. Among small plans, those with less than $1 billion in assets under management, 31% are considering doing the same.
Clear Path Analysis surveyed more than 60 pension plan managers and sponsor representatives in North America for the report. The results were released in a white paper, “Pension Plan De-risking, North America 2014.”
The survey found nearly half of respondents are using liability-driven investing (LDI) strategies to mitigate interest rate risk. Duration-matching LDI is low, however.