Study analyzes retirement fund’s response to financial crisis
September 12, 2009 by Spencer Cameron
A new survey has looked at how corporate pension funds have adjusted their investment programs in response to the economic downturn, including reducing their equity allocations and replacing fund managers.
The work was conducted by the consultancy Watson Wyatt, and found that 67 percent of companies have made or are planning to make changes to their defined benefit plan asset allocations in 2009 and 2010.
The senior-level financial executives from the organizations included in the poll estimate their average target equity allocations will decrease to 47.8 percent, which represents a drop of almost 10 percent from last year. The survey also found that nearly 73 percent of companies have hired or fired managers since June 2008.
"Given the current market, finding solutions to reduce exposure to risk and improve overall investment performance is critical," says Carl Hess, global director of investment consulting at Watson Wyatt.
"While some employers may be limited by the steps they can take, most should be able to find ways to better manage their risks, optimize returns and improve their overall governance strategies," he adds.
The survey also found that employers have made significant changes to their defined contribution plans, with 45 percent planning to add new U.S. equity funds to their lineup, and 62 percent dropping an existing U.S. equity fund this year or next.