US - Plan sponsors are focussing on the most easily definable risks at the expense of those more difficult to model and measure, a study by MetLife has found.
Bill Mullaney, president of MetLife's Institutional Business division, said: "We believe that the results of this study will help increase awareness among pension plan sponsors about the need to take a more comprehensive view of the risks associated with today's pension plans."
The survey also found many sponsors did not take a holistic view of risk factors, with risk viewed individually rather than in an integrated manner. Importantly, MetLife found every sponsor discounted at least 5 of the 18 identified risk factors, giving them an importance rating of 0%.
Cynthia Mallett, vice president of MetLife's institutional business division said: "Over time, the approach of focusing on some risks - and ignoring others - could have serious repercussions.
"During the next 12 to 24 months, we expect DB plans to develop a broader view of the risks to which their plans may be exposed as demographic forces, regulatory pressures and market volatility combine to make pension plan management more challenging and more transparent."
The survey also found the top concerns received a disproportionate amount of attention - with investment returns ranked as the most important risk 54% of the time - while the bottom 13 of 18 risk factors were picked as the most important less than 30% of the time.
Susan Mangiero of Pension Governance, Incorporated, who collaborated with MetLife on the research, added: "This research should broaden awareness among plan sponsors of risk factors outside their present comfort zone, thereby enabling them to have a more balanced understanding of their plan's dynamics."
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