UK and US pensions markets have ‘significant’ differences in their approach to risk, a study by MetLife revealed.

The top five risks in the UK were measurement of technical priorities/liabilities, longevity risk, employer covenant, investment management style and funding deficits. The US rated liability measurement, under funding of liabilities, plan governance, asset allocation and adviser risk as its highest risks.

While longevity risk was considered as the second greatest risk in the UK, the US only placed it tenth. Plan governance was rated third in the US but its UK equivalent, scheme governance, was twelfth.

Both countries rated the measurement of liabilities as the highest risk factor and under funding of liabilities appeared in both top fives. Neither country placed data cleansing risk and quality of member/participant data as high importance.

80% of US respondents and 79% in the UK believed they are successful in managing risk, the study found. However, there was a misalignment between the perceived importance of this risk and how successfully they were managed.

Factors considered high importance but low success in the UK were meeting investment return targets, asset and liability mismatch, funding deficits, inflation risk, investment risk profiling and longevity risk. Three of these – asset and liability mismatch, funding deficits and investment risk profiling – were also rated high importance but low success in the US.

The survey by MetLife and MetLife Assurance for US Pension Risk Behaviour Index and the UK Pension Risk Behaviour Index analysed how trustees and sponsors viewed 18 liability, business and investment risks that affected their schemes and how they viewed they were managing these risks.

MetLife Assurance chief executive officer Dan DeKeizer said: “Despite the widely held assumption that the US and UK pension markets are, for the most part, virtually identical, the way that pension risk factors are prioritised is very different. In part, this can be explained by how, historically, assets rather than liabilities have been the main focus of pension scheme management in the US, and also by the different frameworks and structures of the regulatory regimes in place.”

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