Wednesday, February 25, 2009

Tip of the Day: DB sponsors, go to Plan B

Okay, so maybe most pension plan sponsors are already on Plan Q in terms of how to stop the blood-letting in their plans due to the economic crisis, but a recent report by Associate Editor Lydell Bridgeford on highlights analysis from Watson Wyatt sponsors may want to consider. Although it's far from ideal, Alan Glickstein, senior retirement consultant at Watson Wyatt, says employers may need to rob Peter to pay Paul, so to speak.

"Changes in funded status are wreaking havoc with the projections companies have made," says Glickstein. "Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it."

Meanwhile, 75% of U.S. pension plan sponsors report that their organizations have already transferred assets out of equities and into bonds or alternatives, according to a survey by SEI's Institutional Group, an asset management firm. The survey questioned 157 American and international pension executives who oversee pensions ranging from $30 million to more than $5 billion in assets.

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