Industry News

In April 2022, the Society of Actuaries (SOA) published its Retirement Section report, Defined Benefit Risk Phase 2: Expert Interviews. In collaboration with the Retirement Section’s Project Oversight Group (POG), the SOA researchers are conducting a three-phase project intended to address the challenges in communicating defined benefit to pension risk to stakeholders. The project includes: Phase 1 – Literature Search Report; Phase 2 – Expert Interviews; and Phase 3 – Review and Discussion.

In December 2020, the Phase 1 literature search report identified articles on pension risk that were published in peer reviewed journals in addition to submissions on pension risk management of the Social Sciences Research Network (SSRN). It covered literature related to: 1) risk management; 2) risk measurement; and 3) risk mitigation.

The recently published Phase 2 report contains interviews with individuals representing various aspects of plan administration including: plan fiduciaries, finance professionals, consultants and providers. The report summarizes the interviews related to risk management processes, risk measurement, and risk mitigation techniques and concludes that:

• Risk management processes vary by type of plan (i.e., public sector, corporate, …);
• Risk management processes vary by sophistication level of plan’s trustees/decision makers;
• Risk management processes vary by levels of importance of the plan on a sponsoring entity’s financials; and
• Governance is a challenge for all plans.

In the future, Phase 3 is planned to review and integrate the findings from Phases 1 and 2, and recommend other areas for additional study.

Currently, Jim Anderson, Senior Consultant for GRS, serves on the POG and contributes to this effort.

The report is available here.