Increases in pension plan risks will continue, Ortec Finance study says
11 April 2023 US
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97 per cent of US public sector pension plan managers have seen risk profile increases over the past year, recent research from management solutions provider Ortec Finance has found.
81 per cent of those surveyed expect this trend to continue in the next year, with 29 per cent predicting a “dramatic increase”.
The study, conducted in February 2023, interviewed 31 managers with a collective US $553.25 billion in assets under management.
Interest rates are the primary concern for the funds’ risk, managers detailed, followed by cash flow requirements and liquidity, investment market volatility and inflation. Cybersecurity was also cited as a risk enhancer.
Ortec Finance reports that both strategic and day-to-day risks are being addressed by managers, with almost all (97 per cent) of those questioned “actively taking climate risk into consideration”.
Additionally, managers are confident in their plans’ long-term objectives. All describe their plans as “feasible”, with plan sponsors stating that risks are within the agreed risk budget.
Marnix Engels, managing director of pension strategy at Ortec Finance, says: “It is reassuring to see that pension plan managers are taking long-term risks into account. Macro-level decisions usually have a greater impact on risk and return.”
81 per cent of those surveyed expect this trend to continue in the next year, with 29 per cent predicting a “dramatic increase”.
The study, conducted in February 2023, interviewed 31 managers with a collective US $553.25 billion in assets under management.
Interest rates are the primary concern for the funds’ risk, managers detailed, followed by cash flow requirements and liquidity, investment market volatility and inflation. Cybersecurity was also cited as a risk enhancer.
Ortec Finance reports that both strategic and day-to-day risks are being addressed by managers, with almost all (97 per cent) of those questioned “actively taking climate risk into consideration”.
Additionally, managers are confident in their plans’ long-term objectives. All describe their plans as “feasible”, with plan sponsors stating that risks are within the agreed risk budget.
Marnix Engels, managing director of pension strategy at Ortec Finance, says: “It is reassuring to see that pension plan managers are taking long-term risks into account. Macro-level decisions usually have a greater impact on risk and return.”
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