Following the announcement of NEPC's Annual Defined Benefit Plan Survey, Pensions & Investments covered the results.
"The PBGC rate premium decision has had a major and lasting impact on plan sponsors and their strategies," said Brad Smith, partner in NEPC's corporate practice, in an email. "Not only have we seen an increase in overfunded plans to help hedge against these premiums, we're also seeing plans accelerate the derisking process and move down the glidepath more quickly. With so much at stake, we don't expect plan sponsors' anxiety toward rate premium increases to subside."
In 2017, 35% of respondents said they had modified glidepath trigger points, up from 23% the previous year, whole 53% made no change, down from 74%. Twelve percent of survey respondents, meanwhile, said they increased risk in their portfolios in 2017, up from 3% the previous year. Among those respondents, 75% had funding ratios of less than 90%.
NEPC surveyed defined benefit plan executives from both corporations and health-care organizations. Among those corporations surveyed, 59% said they use liability-driven investing in their plan, while 56% of health-care organizations implement LDI. Twelve percent of corporations do not now use LDI but are considering it, while 9% of health-care organizations do not utilize it but are considering it.