Plan sponsors are taking their fiduciary responsibilities seriously and dealing proactively with the financial crisis, suggests a new survey from Aon Consulting.

Of the 100 defined contribution plan sponsors recently surveyed, 78% have reviewed their plan's core offerings to ensure they have sufficient diversification. Of the 81 defined benefit plan sponsors that responded, 62% have reviewed the current economic turmoil's impact on their pension costs, and another 33% intend to do so.

"Sponsors aren't ignoring the situation," says Barry Gros, a vice president in the retirement practice at Aon in Toronto, adding that the push for governance in recent years appears to have had a positive effect. "From a governance perspective or a management perspective, things are better off than I actually thought they might be."

On the DC side, 49% of plans have evaluated the risk exposure associated with managers that maintained a high level of exposure to securities of financial firms that have experienced significant upheaval, such as Lehman and AIG. The other 51% have relied on recommendations from their vendors.

On the DB side, 77% have either investigated or intend to investigate asset and liability techniques that minimize volatility risk, including lengthening the bond duration, changing the plan design, freezing the plan and increasing fixed income allocations.

Gros notes that the current financial crisis has highlighted the fact that "the system we've built to manage and fund pension plans, especially with the solvency funding rules the way they exist, isn't necessarily viable. Here we have a financial crisis, and those rules aren't working."

Whether your plan is a DB or DC plan, Gros suggests a few things plan sponsors can do to better deal with the current economic uncertainty. Assess and understand which risks are inherent in the pension plan you're responsible for.

"Unfortunately, I think some organizations and some plans are overly optimistic of what they expect from investment returns or that crises like we've seen won't happen," Gros says. Some plan sponsors "haven't necessarily stress-tested their situations through scenario-testing, such as asking themselves if they could survive three consecutive years of really bad investment returns."

Additionally, have a plan that deals with the risks and stick with it, advises Gros. "If you have a plan, you probably understand what you need to do through good times and bad."

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