Pension-plan executives are probably spending more time in the office these days because of the current financial markets. Yet a recent poll by SEI’s Institutional Group shows that many are putting out administrative fires and monitoring investment managers, instead of focusing on new investment strategies.
The poll, conducted in July 2009, involved 105 executives overseeing pension plans around the world from $30 million to more than $5 billion in assets.
Defined benefit plan directors report that half of their time is spent on administrative activities (27%) or monitoring investment managers (23%). Executives, however, are spending less than one-fifth of their time doing the homework necessary to develop new investment strategies. This entails evaluating investment managers and researching new asset classes.
“The past year has created a need for pension executives to focus on bigger, more strategic issues. It’s not realistic to expect to be successful at better aligning assets and liabilities if resources are spending half of their time on administrative functions and monitoring the performance of managers,” says Jon Waite, director of investment management advice and chief actuary of SEI’s institutional group. “Plan sponsors are realizing that success will only be brought about by changes to the current process,” he adds.
Other key findings from the poll:
- More than two-thirds (68%) of respondents said there is an increased focus on managing pension assets in association with the pension’s liabilities.
- About 54% of pension executives said the organization has an increased interest in risk management and a goals-based approach to pension management.
- Recent market conditions have caused pension plans to have a negative impact on overall corporate finances for more than half (56%) of the participating companies.
- Nearly half (44%) of all global participants said the recent market turmoil has increased the likelihood the organization will take steps to terminate the pension plan as soon as possible.
- Nearly a quarter said they either had to proactively ask their consultant for advice during the market turmoil (23%) or that they felt there should have been a higher level of proactive communication from their consultant (24%).
- Plan design changes continue as almost half (48%) of global plans are closed to new hires.
- About 50% of U.S. poll participants said that additional government funding relief – beyond last December’s relief bill – is still needed.
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