London, 3 September 2009 

A new Watson Wyatt survey has found that corporate pension funds have been making numerous changes to their investment programs in response to the economic crisis. Some of these changes include significantly reducing target equity allocations and shaking up fund manager lineups. However, relatively few funds have taken steps to better plan and implement risk strategies or lower costs. 

The main findings of the survey include:

• Two-thirds (67 percent) of companies have made or are planning to make policy changes in 2009 and 2010 to their defined benefit (DB) plan asset allocations.

• By next year, these organizations project that they will have decreased their average target equity allocations to 47.8 percent, a nearly 10 percentage point drop since last year.

• Almost three-quarters (73 percent) of companies have hired or fired managers since June 2008 – 52 percent having both hired and fired managers.

• The survey found mixed results in terms of measures employers are taking to improve their DB governance strategies. Less than half (41 percent) will have implemented cost-cutting strategies by the end of 2009, while only 12 percent will have established a risk advisory committee.

• Nearly two-thirds (62 percent) have taken a more stringent approach to managing fiduciary risk since June 2008, and 62 percent will have conducted stress tests on their ability to meet future funding requirements by the end of 2009.

Ends --

The Watson Wyatt survey was conducted in August 2009 and includes responses from 85 senior-level financial executives from large, US based companies.

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