Financial Challenges Still the Top Priority, but HR Concerns Increasing: Findings From the 2008 Survey of Pension Risk

The results of the fifth annual Watson Wyatt/Signal49 Research survey on pension risk show that, while financial concerns continue to dominate, respondents are increasingly upbeat about the long-term outlook for Canadian defined benefit (DB) pension plans. DB plans are seen as superior to other retirement savings arrangements for retaining employees—a view that should persist in light of an increasingly tight labour market and aging population. Accordingly, human resources considerations are expected to play an increasing role in plan design decisions, rivalling financial considerations within five years. Despite the optimism, plan sponsors continue to be concerned about controlling the volatility of funding contributions, and more DB sponsors are adopting liability-matching approaches in their investment strategies to mitigate inflation and interest rate risks.