According to Aon Hewitt's survey of more than 220 U.S. companies with defined benefit plans representing 5.8 million workers, 62 percent of pension plan sponsors are somewhat or very likely to adjust their plan's investments to better match the liabilities in the year ahead, compared to just one-in-six that do so today. Some companies plan to go one step further and adopt dynamic investment policies or glide paths that increase exposure to fixed income and risk-hedging options as their plan's funded status improves. Twenty-two percent of employers currently have a glide path strategy in place. By the end of 2014, 30 percent of companies are expected to have embraced this approach.
"The strong market returns of 2013 improved the funded status of many employers' pension plans," said Rob Austin, director of Retirement Research at Aon Hewitt. "Implementing an investment policy that mirrors liability movements as underlying economic conditions change allows plan sponsors to lock in these gains. In addition to changing their investment policy, more companies are establishing holistic de-risking strategies to further guard their plan's funded status and reduce liabilities."