Hewitt recently surveyed more than 400 retirement professionals worldwide (including 153 U.S. respondents) to understand how they are adapting their pension management practices in response to ongoing market volatility. Our survey found that most U.S. companies are taking active steps to reduce their overall pension risk by changing the way they fund, invest, and design their pension plans.

On funding policy, 66% of all U.S. respondents indicate that they have adopted a funding policy geared toward maintaining an 80% funded level to avoid benefit restrictions, and 83% of U.S. respondents now expect to make additional contributions to their plans as a result of the recession.

Investment policy changes are also taking place, with almost 40% of U.S. respondents indicating a reduction in equity exposure. U.S. companies are also five times more likely to consider delegating their entire investment policy to professional advisors.

In terms of plan design, recent market turmoil has increased U.S. respondents' willingness to consider closing and/or freezing their plans. Thirty-one percent of U.S. respondents are more likely to consider closing their plans, compared to 11% of companies in 2008. Similarly, 50% of U.S. respondents are now more likely to consider freezing their plans, up from just 17% in 2008.

Although U.S. companies are beginning to recognize the need to take a more active role in monitoring pension risk, Hewitt believes significant opporunities remain. By giving equal attention to both asset and liability positions, companies can gain a clearer understanding of the risks associated with their plans and ultimately make decisions that optimize risk and return from the perspective of the Pension Protection Act (PPA) of 2006.

Click the link below to view/download a U.S. highlights report from the Global Pension Risk Survey.