Skip directly to content

2012 Press Releases

INDEX VALUE OF METLIFE U.S. PENSION RISK BEHAVIOR INDEX℠ RISES TO HIGHEST LEVEL IN FOUR YEARS AS A BALANCED APPROACH TO RISK MANAGEMENT TAKES HOLD

-- Underfunding of Liabilities Most Important Defined Benefit Pension Risk for Second Straight Year, According to MetLife Study --

New York, NY – February 29, 2012 — Plan sponsors of the largest U.S. defined benefit (DB) pension plans are deepening their risk management focus on plan liabilities and are increasingly viewing plan assets in the context of liabilities, according to the 2012 MetLife U.S. Pension Risk Behavior Index℠ Study (U.S. PRBI), the fourth annual study released today. Amid ongoing economic and regulatory uncertainty, the top two risk factors identified as most important to plan sponsors today continue to be liability-related – Underfunding of Liabilities and Asset & Liability Mismatch. These two risks are followed in the importance rankings by Asset Allocation and Meeting Return Goals, two investment-oriented risks.

The 2012 U.S. PRBI Study, which surveyed 156 corporate plan sponsors, measures plan sponsors’ aptitude for managing – and attitudes about – 18 investment, liability and business risks to which their plans are exposed. A full copy of the report can be downloaded at www.metlife.com/pensionrisk.

“A weakened economy and persistently low interest rates have combined to exert consistent pressure on DB plans,” said Robin Lenna, Executive Vice President, Corporate Benefit Funding, MetLife. “In order to ensure they can meet their future obligations, plan sponsors are taking a more balanced approach to pension plan management that takes into account a plan’s assets relative to its liabilities.”

Index Value Highest To Date

The 2012 Index value is 85 out of 100, its highest level to date, up from 81 in 2011. Data from the survey is used to calibrate the importance that the companies surveyed ascribe to managing each of the 18 risk factors, their reported success at implementing comprehensive practices to manage each risk and the consistency between the two. Ideally, there should be consistency over time between the level of importance that plan sponsors ascribe to certain risks and how successfully they believe they are managing them. The increased Index value demonstrates that consistency between importance and success has improved.

The increase in the Index value is also indicative of the sustained level of engagement plan sponsors have with risk management, and that plan sponsors are developing some commitment to a new course of risk management.

“There is a heightened interest among plan sponsors and senior finance executives in gaining a better understanding of the pension plan environment and its relationship to the overall financial performance of their business,” said Cynthia Mallett, Vice President, Corporate Benefit Funding, MetLife. “What has become clear over the past several years is that managing pension liabilities can be a difficult challenge for even the most sophisticated financial executive. Because plan sponsors can’t rely on traditional asset allocation models to ensure they can meet their liabilities, what is emerging are more integrated pension risk management frameworks that are carefully devised and frequently reviewed.”

Core Set of Pension Risks Takes Hold

The rankings of the most important risk factors in the 2012 U.S. PRBI Study are very close to those of the 2011 results, indicating that plan sponsors are holding true to a core set of risk factors. The top four risk factors – Underfunding of Liabilities, Asset & Liability Mismatch, Asset Allocation and Meeting Return Goals – are identical to the 2011 rankings. In addition, the relative importance rankings for eight of the 18 risk items remained unchanged from 2011.

Self-Reported Successful Management of Pension Risks at Highest Level

In 2012, the self-reported successful management of pension risks is at its highest level in the four year history of the U.S. PRBI Study. Among the 18 risk factors presented to plan sponsors in the study, 83% of all ratings indicated success (i.e. plan sponsors rated them a 4 or a 5, with 5 equaling highest success), compared to 75% in 2009, the first year the study was conducted. Liability Measurement retained its position as the most successfully managed risk for the third year in a row, indicating that plan sponsors feel comfortable with their liability valuations and understand the drivers that contribute to their plan’s liabilities.

Success Still Lags for Most Important Liability-Related Risks

Despite high success ratings overall, some risks continue to present challenges for plan sponsors. Underfunding of Liabilities and Asset & Liability Mismatch – the top two risks by importance – are ranked 11th and 12th in reported success, respectively, consistent with the 2011 results.

“We believe that the economic and regulatory environment will sustain a more prudent and integrated approach to funding strategies, investment policy decisions and de-risking activity among plan sponsors.” Mallett continued.

About the Study

The MetLife U.S. Pension Risk Behavior Index℠ was conducted in conjunction with two research partners – Bdellium Inc. and Greenwich Associates – during the period of September through December 2011. Commissioned by MetLife, the 2012 U.S. PRBI Study surveyed 156 large plan sponsors (of which 95 reported defined benefit assets of more than $1 billion). Interviews were completed by telephone with a web-assisted option, i.e., respondents had the ability to view the risk factors and questions online while answering the survey via telephone. Respondents consisted of senior financial professionals whose primary focus is pension investments, risk management or employee benefits, in addition to corporate management. A complete report of the findings for the MetLife U.S. PRBI Study (and detailed description of the research methodology) is available at www.metlife.com/pensionrisk.

About MetLife

Metropolitan Life Insurance Company (MetLife) is a subsidiary of MetLife, Inc. (NYSE: MET), a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 50 countries. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. For more information, visit www.metlife.com.

Contact:

mlantier@metlife.com

Press Release Archives

2014
2013
2012
2011

When I enter a phone number in the space provided above, I consent to receive phone calls to the phone number I provided, including calls to my wireless phone. I consent to have these calls generated using an automated technology from the MetLife family of companies, or vendors on MetLife's behalf, and that voicemails may be pre-recorded messages. My consent is not required to make a purchase.

Copyright 2003-14 Metropolitan Life Insurance Company NY, NY - All Rights Reserved.
PEANUTS © 2014 Peanuts Worldwide LLC