2025 CFO Survey Results: Mitigation of strategic risk 

In part two of this three-part series covering our 2025 Mercer/Argyle CFO Survey¹ results, we explore the rising priority of risk reduction in defined benefit (DB) plan management. The survey included responses from 173 senior financial executives who manage an organization’s DB or pension plan. Survey responses capture a broad cross-section of US industries and plan sizes, from those with less than $100m in assets (5% of total participants), to plans of between $100m to $1bn (34% of the total), and large and mega plans in excess of $1bn in assets (61% of the total). Below summarizes the survey’s three key takeaways.

Part 1

Journey planning and plan design: Funding improves, and the roadmap changes – How organizations are refining plan direction and exploring new models.

Part 2

Mitigation of strategic risk: Pension risk transfers forge ahead amid new litigation – How tools like glide paths, annuities, and lump sums are used to control volatility.

Part 3

Pension oversight, investments, and governance: Managing investment risk and governance risk is top of mind – How governance structures and fiduciary practices are being redefined.

As risk reduction becomes one of the central focuses in DB plan management, strategies such as lump sum windows, annuity buyouts, and dynamic glide paths have evolved in both design and implementation. The survey reveals these methods are being applied as part of a long-term strategy, rather than a reactionary approach.

Lump sum windows are becoming increasingly widespread. Most plan sponsors have already implemented some version of this strategy, and over 72% of companies say they are likely to adopt more in the next 24 months. CFOs employ lump sum windows to address liability volatility, reduce plan administration expenses, and ease the maintenance of benefits for participants.

Communication is an essential component of successful lump sum window strategies. CFOs observe that employees need time, tools, and education to make wise decisions. Best practices include but are not limited to modeling tools, individual decision letters, and pre-window informational webinars. When carefully executed, these strategies may result in greater participant uptake as participants gain the confidence to act rather than defaulting to “no change.” In addition, focused outreach can also boost engagement and reduce confusion, thereby supporting fiduciary responsibility.

In our interview with Sandra D. Pham, Vice President of Finance, People & Culture at Kaiser Permanente, she emphasized that “Lump sums aren’t just transactions; they require transparent dialogue to ensure employees feel secure.” Her observation reflects the emerging standard that successful risk mitigation can depend as much on trust and transparency as it does on calculations and data.

Annuity buyouts have become more mainstream. In 2025, 64% of respondents reported having completed or are considering transferring some of their DB plan liabilities to insurance companies. These transactions can eliminate investment, longevity, and administrative risks, enabling employers to exit long-term obligations while fulfilling promised benefits. Some sponsors are beginning with small buyouts targeted at a subset of the retiree population to test operational readiness and stakeholder trust before scaling up.

As the insurance market has become more competitive, annuity pricing has become more attractive. However, it could be argued that for many years, market perceptions were misaligned with reality. As recently as 2021, a majority of plan sponsors perceived the cost of annuitization to be 105% or higher for retiree-only deals. Mercer’s experience indicates these deals generally close in the 97-99% range. In the 2025 survey, finance executives are more in tune with the cost of actual deals, with the majority pegging the price at between 95% and 105%.

Another encouraging trend, according to the 2025 survey results, is greater flexibility from insurers. This flexibility, whether through phased implementation, partial buyouts, or tailored annuity solutions, can help meet unique business risk requirements. Marco Rossi, Head of Finance at Siemens Healthineers, shared his perspective on strategic risk alignment: “We weren’t driven by cash availability or interest rate concerns, but rather by a desire to decouple the pension risk from our operational performance.” His remarks underscore how annuity buyouts can be integrated to support broader goals around business risk control objectives.

Organizations are recognizing the potential importance of having clean, accessible data to effectively leverage these pension risk transfer solutions. While 63% of respondents say their data is in good shape, Mercer finds that actual readiness may be lower. Prudent pension management requires a continuous review of data fields, such as participant status, service credit, and spouse information, while ensuring that the data is validated to prevent further delays in processing transactions. Data accuracy is even more critical for annuity transactions, as insurer pricing and qualification thresholds are closely tied to demographic accuracy.

Meanwhile, investment glide paths are being adopted not only as a risk-reduction strategy but also as a governance tool. When Mercer first started this survey in 2011, such strategies were at the cutting edge of pension investment management. Today, they are commonplace, with 70% of organizations using dynamic glide paths that change asset allocations according to funded status. Such frameworks enable plans to gradually reduce the allocation to return seeking assets, such as equities, and increase liability-hedging assets as the plan’s funded status improves.

The glide path design varies. Some plans use multi-trigger structures, such as interest rate triggers, in addition to funded status. Others may track funding ratios on automated dashboards in real time to rebalance portfolios and keep funding ratios on track. Several of the financial executives surveyed said that glide paths also assist in conveying plan discipline to boards and regulators, delivering a clear roadmap for managing risk over time.

To facilitate risk mitigation, many companies are setting up internal task forces comprised of finance, HR, and legal representatives. These cross-discipline groups are responsible for vetting service providers, validating data, determining the order of operations for de-risking steps, and setting the strategy for communication, among other things. When organizations put the appropriate governance around risk transfer activities, they can be better equipped to navigate the regulatory landscape.

For some organizations, risk management is part of their labor relations and talent strategy. According to the survey, several executives reported that participants have responded positively to lump sum and pension risk transfer activity, especially when accompanied by transparency. By clearly communicating the rationale behind these actions, companies can reinforce their credibility by demonstrating how risk management supports their broader pension and compensation strategy.

Companies with more mature de-risking activities in place are now shifting their focus and efforts to their defined contribution (DC) plans, innovating those designs to provide more retirement security for their employees. These efforts can include improving retirement design and adding wellness offerings such as financial coaching.

Risk management isn’t a standalone effort, it’s a tactic in a larger pension playbook that includes funding objectives, investment strategy, timing, operational alignment, and a workforce plan. As more organizations adopt this approach, the conversation has shifted from whether to implement risk management to how well it is executed. Focusing on clear, straightforward communication can help strengthen governance and facilitate long-term planning.

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_{¹All responses are sourced from the 2025 Defined Benefit CFO Survey obtained in March 2025. The 2025 CFO survey results are of 173 financial executives managing an organization’s DB plan. Mercer has collaborated with an independent researcher to conduct surveys in March 2025, 2023 and 2021. Statistics shown throughout reflect results from responding DB plan sponsors. Responses were provided by CFOs and senior finance executives responsible for managing a DB plan. Note that they did not receive any form of compensation. It is important to recognize that survey results are subject to inherent limitations and uncertainties. The survey results may not capture all relevant factors or market conditions. These results should not be construed as personalized investment advice. If you have any further inquiries or require additional information, please do not hesitate to contact us. For a comprehensive list of questions & responses pertaining to the survey results, please contact us. The information provided via this survey is for ease of reference only and is not intended to serve as an endorsement of Argyle or its services.}