Although the Senate dropped provisions from its $15 billion jobs bill that would have provided pension funding relief to defined benefit plan sponsors in the private sector, DB plan sponsors appear to be optimistic about managing pension risks.

According to MetLife’s second annual "U.S. Pension Risk Behavior Index,” plan sponsors report that they are taking a much broader approach to managing DB plan liabilities and risks, compared to last year.

Plan sponsors indicated they have adopted a new strategy that moves away from a focus on the asset side of the asset-liability equation, but instead concentrates on liability-related risks.

In the survey, which polled 166 DB plan sponsors in the private sector, the top 2010 risk factors deemed important to plan sponsors include liability measurement, underfunding of liabilities, plan governance and asset allocation.

In 2009, asset allocation and meeting return goals topped the list as key concerns for plan sponsors, but this year asset allocation dropped to number four, and meeting return goals fell to 14.

“When we examined the year-over-year changes in the ways in which plan sponsors think about and manage pension plan risks, plan sponsors are becoming much more ‘liability aware,’ as we predicted in last year’s study,” says Cynthia Mallett, MetLife vice president of corporate benefit funding, who oversaw the study. “While clearly this shift in focus was spurred by the market environment, it also may signal an acknowledgement that traditional methods of mitigating risk by diversifying the investment portfolio may no longer be viable as a sole or primary means of pension risk management,” she adds.

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