Pensions trustees and employers have different attitudes towards risk

Pension trustees and employers have differing attitudes when it comes to managing risk, according to research from MetLife Assurance.

While the employers are interested in looking at risk associated with liability and business, trustees ascribe more importance to investment-related risks.

The study of 80 pension scheme sponsors and trustees showed that 29% of trustees rated investment management style as the most important factor to look at when managing risk, compared to 31% of employers that prioritised looking at longevity risk. 

Asset diversification, asset liability and the measurement of technical provisions/liabilities were the second most important issues to address for 28% of trustees.

Although, 30% of employers also rated the measurement of technical provisions/liabilities as the second most important factor, employer covenant (29%), scheme governance (29%) and inflation risk (27%) were high on the agenda. 

Meanwhile, trustees thought investment risk profiling (27%) was more important.

Emma Watkins, head of relationship management at MetLife Assurance, said: “At a time when trustees and scheme sponsors need to be more vigilant than ever in identifying the short and longer term risks associated with their DB scheme, this inaugural study serves as a benchmark against which future risk management attitudes and perceptions can be measured. We hope it becomes a useful tool for scheme sponsors and trustees as they explore risk management strategies with one goal in mind – protecting member benefits.”

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