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CFO Research’s New Study: Finance Executives Are Becoming More Likely to Consider Risk Transfer Strategies for Pension Obligations

July 17, 2013

At companies that are still managing pension plans for their employees, de-risking strategies have become more established over the past few years. Now, many of these companies are giving more serious consideration to ways of moving pension liabilities off the balance sheet completely through risk transfer strategies.

Boston, MA (PRWEB) July 17, 2013

At companies that are still managing pension plans for their employees, de-risking strategies have become more established over the past few years. Now, many of these companies are giving more serious consideration to ways of moving pension liabilities off the balance sheet completely through risk transfer strategies.

That’s one of the conclusions drawn from a recent study conducted by CFO Research and underwritten by Mercer, the global human capital consulting firm. The full report, “Evolving Pension Risk Strategies: The Journey to Risk Transfer and Outcomes-Based Objectives,” is available for download at http://www.cfo.com/research.

The research report is based primarily on online survey responses from 177 finance executives and managers employed at U.S. companies and nonprofit organizations with defined benefit (DB) plans in place. Comparing these results with a similar study it conducted in 2011, CFO Research found that senior finance executives have become more focused on reducing pension risk as their plans become better funded, seeking to lock in gains when they are made and protect the financial health of the company in the face of an uncertain economic outlook. Nearly 8 out of 10 respondents in the 2013 survey expect to consider greater use of fixed-income investments and dynamic de-risking, which automatically shifts assets into lower-risk categories as a company’s funded ratio improves.

With these strategies firmly in place, finance executives are looking ahead to the next steps in the evolution of pension risk management, such as lump-sum distributions to segments of pension plan participants and the purchase of annuities from insurance companies. Favorable changes in legislation, coupled with ground-breaking risk-transfer actions like those taken by Ford, General Motors, and Verizon in 2012, have brought these kinds of options to more plan sponsors’ attention. Somewhat fewer than half (45%) of the respondents in this year’s survey said that they view pension risk transfer as a more viable option in light of these other transactions. An executive writing in the survey noted that the high-profile transactions “put [annuities] on the radar, [and we are] more likely to at least investigate.”

Such moves, according to the report, are being made in the context of helping companies better meet the demands of an uncertain business environment. Survey respondents confirmed that a company’s financial performance figures strongly in their DB-plan decisions. As one senior executive wrote, “Shareholders expect money to be used to grow the business operations, not to directly fund liabilities from the past.”

About CFO Research:

CFO Research (cfo.com/research) is the research group at CFO Publishing LLC, a portfolio company of Seguin Partners that is the leading business-to-business media brand focused on the information needs of senior finance executives. Delivering content through multiple channels including online, digital, mobile, and print, the business consists of CFO magazine, CFO.com, CFO Research, CFO Learning and CFO Conferences. CFO’s award-winning editorial content and loyal, influential audience make it a valued resource for its readers as well as an effective marketing partner for a wide range of blue-chip companies. CFO has long-standing relationships with nearly a million finance executives.research

About Mercer

Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies, a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit http://www.mercer.com. Follow Mercer on Twitter @MercerInsights.

For the original version on PRWeb visit: http://www.prweb.com/releases/2013/7/prweb10936907.htm


Source: prweb



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