MetLife's U.S. Pension Risk Behavior Index rose to its highest level in four years, as companies took a more balanced approach to risk management. In its fourth annual U.S. Pension Risk Behavior Index Study, MetLife found that plan sponsors of the largest U.S. defined benefit pension plans are focusing more on risk management and plan liabilities and are increasingly viewing plan assets in the context of liabilities.
According to the plan sponsors surveyed for this study, underfunding of liabilities and asset and liability mismatch are two of the most pressing risk factors they face.
The 2012 study, which surveyed 156 corporate plan sponsors, measured their aptitude and attitudes about managing the 18 investment, liability and business risks to which their plans are exposed.
Recommended For You
"A weakened economy and persistently low interest rates have combined to exert consistent pressure on DB plans," said Robin Lenna, executive vice president of corporate benefit funding for MetLife. "In order to ensure they can meet their future obligations, plan sponsors are taking a more balanced approach to pension plan management that takes into account a plan's assets relative to its liabilities."
The 2012 Index value is 85 out of 100, its highest level to date, up from 81 in 2011.
Data from the survey is used to calibrate the importance that the companies surveyed ascribe to managing each of the 18 risk factors, their reported success at implementing comprehensive practices to manage each risk and the consistency between the two. Ideally, there should be consistency over time between the level of importance that plan sponsors ascribe to certain risks and how successfully they believe they are managing them. The increased Index value demonstrates that consistency between importance and success has improved.
The increase in the Index value is also indicative of the sustained level of engagement plan sponsors have with risk management, and that plan sponsors are developing some commitment to a new course of risk management.
"There is a heightened interest among plan sponsors and senior finance executives in gaining a better understanding of the pension plan environment and its relationship to the overall financial performance of their business," said Cynthia Mallett, vice president of corporate benefit funding for MetLife. "What has become clear over the past several years is that managing pension liabilities can be a difficult challenge for even the most sophisticated financial executive. Because plan sponsors can't rely on traditional asset allocation models to ensure they can meet their liabilities, what is emerging are more integrated pension risk management frameworks that are carefully devised and frequently reviewed."
Among the 18 risk factors presented to plan sponsors in the study, 83 percent of all ratings indicated success (i.e. plan sponsors rated them a 4 or a 5, with 5 equaling highest success), compared to 75 percent in 2009, the first year the study was conducted. Liability measurement retained its position as the most successfully managed risk for the third year in a row, indicating that plan sponsors feel comfortable with their liability valuations and understand the drivers that contribute to their plan's liabilities.
The MetLife U.S. Pension Risk Behavior Index was conducted in conjunction with two research partners – Bdellium Inc. and Greenwich Associates – from September through December 2011.
Metropolitan Life Insurance Company is a subsidiary of MetLife, Inc., a global provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 50 countries.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
