Aon's 2025 Global Pension Risk Survey: De-risking Strategies for DB Plans

Aon’s 2025 Global Pension Risk Survey presents comprehensive insights into strategies employed by defined benefit (DB) plan sponsors to manage pension liabilities and streamline investment operations. In today's landscape, plan sponsors are increasingly focused on de-risking strategies, such as reducing liabilities and adopting outsourced investment management solutions.

By 2025, U.S. corporate pension funding levels reached unprecedented heights. However, only about 32% of DB plan sponsors plan to terminate their plans fully. Over the past decade, firms have involved themselves in transactions like lump sums and annuities to significantly curtail their pension obligations. In 2012, DB plans constituted around 28% of a company's market capitalization, but this figure shrank to approximately 10% by the end of 2025.

According to Tim Herron, Senior Partner at Aon, despite stronger pension funding levels, certain obligations still affect corporate balance sheets. A PLANSPONSOR survey reported that of 18,122 U.S. DB plans, 29% remain active while 47% are frozen. Moreover, 27% of de-risking participants chose lump sums, and 36% opted for annuities, revealing distinct trends in regulatory compliance requirements and industry strategies.

For sponsors maintaining their DB plans, 54% intend to sustain their liabilities, and 12% pursue significant partial settlements. Common de-risking strategies include offering lump sums to deferred participants and utilizing annuity lift-outs for retirees. Additionally, 35% of surveyed sponsors have embraced outsourced investment management, such as the Outsourced Chief Investment Officer (OCIO) model, to streamline governance and enhance risk management.

The survey reveals a pivot towards customized liability-hedging investments, as sponsors move away from equities to mitigate risks. Although only a few respondents adjusted their investment policies for higher interest rates, Aon recommends reevaluating glide paths and adding alternative assets for diversification. This approach underscores the need for dynamic investment strategies to harness potential market returns.

Fiduciary liability insurance recognition has surged from 48% in 2022 to 76% in 2025, highlighting increased awareness of coverage for fiduciary breaches and administrative errors. As plans edge towards termination, data integrity remains crucial. More than half of those planning terminations have initiated data clean-up efforts for more precise annuity pricing. Jake Pringle of Milliman emphasizes the importance of timing in annuity purchases, guided by the Pension Buyout Index for retiree buyout costs.

Despite prevalent de-risking trends, some plan sponsors are ready to maintain or increase investment risk to amplify pension surplus value. While some investigate transferring surplus funds to retiree benefits, such initiatives remain limited. Ultimately, Aon's survey involving 88 U.S. corporate DB plan sponsors illustrates the ongoing adaptation of pension strategies amid shifting economic conditions and regulatory landscapes, balancing benefits sustainability and potential plan terminations.