Longevity risk remains a top concern for a quarter of pension professionals according to research by State Street.
When asked what level of priority they assign to different risk types, 26% said ‘very high' in relation to longevity according to Pensions with Purpose: Meeting the Retirement Challenge. A further 25% mentioned investment risk while 22% were concerned about liquidity risk and 14% operational risk.
Less than a quarter (22%) said their organisation was highly effective in managing issues around longevity. The corresponding figures for managing risk around liquidity, investment and operations were 15%, 14% and 20%, respectively.
In terms of how effective pension professionals believe key aspects of their risk management framework are, 28% described the quality of insight from their external asset managers on risk as very strong, compared to just 8% who thought it was below average or weak.
When considering the quality of insight from consultants on risk, 27% said this was very strong, and just 9% believe it was below average or poor.
State Street head of asset owner solutions and strategic market initiatives Oliver Berger said: "Our findings reveal pension schemes are investing heavily to make improvements around the transparency and frequency of reporting and data, but acknowledge there is still more work to do."
"Asset owners are well aware of the challenges they face and what needs to be done to address them. Our research reveals they also have confidence in their in-house risk management teams to deliver on this, with 30% of pension professionals describing their colleagues' capabilities here as very strong, and a further 55% describing them as strong," he added.
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