Defined benefit (“DB”) plans in the U.S. account for $2.3 trillion in assets and cover nearly 42 million plan participants, of whom over 20 million are active employees, according to the U.S. Department of Labor.1 Though shrinking in number, these traditional employee benefit plans remain an important part of the investment and retirement security landscape.
In light of this, it is perhaps surprising that relatively little is known about how effectively these plans are managing their risks. At a time of great market volatility, a close examination of the full range of plan risks and the tools available to manage those risks is of critical importance.
While the legacy of the extraordinary financial market events of 2008 is yet to be determined, it is certain that it will include an enduring awareness that risk management practices are only as effective as the depth of understanding of the risks themselves.
