Pension plans are cautious about making plan changes, despite the improved economy following the pandemic, according to a survey by Mercer and CFO Research. The report is based on responses from 201 senior finance executives at firms with $500 million or more in annual revenue.

About a third of respondents said they were taking advantage of relief in the American Rescue Plan Act to change funding thresholds to avoid benefit restrictions or participant notices, but only 15% expect to speed up the time frame to fully fund the plan.

“Funding flexibility in pensions allows companies to keep that liquidity in-house so that they can reinvest those funds back into their workforce and business through this turbulent period. Most companies on the whole still have more work to do in shoring up their DB plans, and the funding relief in the new legislation provides more discretion on the pace and time horizon of getting there,” according to Tony Wagman, partner in DB consulting at Mercer.

Transferring risk is a key priority for plan providers, the report found. Ninety percent said they had offered participants lump-sum features to transfer risk within the decade, and 77% were considering offering additional lump-sum benefits in the next two years.

Seventy percent of respondents said they’re using annuitization to transfer benefits, while 77% expect to do so this year or next.

Over two-thirds of respondents said they struggle to make plan changes on schedule, leading to increased outsourcing of investment strategy and execution, according to the report. Over 70% of respondents have outsourced this function to a chief investment officer to some extent.

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