Pension risk management

In response to the changing landscape for defined benefit pension schemes, many employers have made changes to future pension provision.

Most schemes are now closed to new joiners but more and more companies are taking the next step by changing future defined benefits for existing employees. These changes typically only affect future pension benefits rather than the liabilities that have been built up over previous years. In most cases this means a large legacy issue still remains, requiring careful and active management.

Recently, volatile financial markets have meant rapidly changing funding positions for many defined benefit schemes resulting in additional contributions for employers. Often, neither the sponsoring employer nor pension scheme trustees have fully understood and appropriately addressed the legacy issue. They have lacked the tools necessary to:

  • Understand the relationship between assets and liabilities when setting their objectives
  • Set investment strategies which reflect the scheme liabilities and objectives
  • Monitor the performance of both assets and liabilities against these objectives
  • Take decisive action to reduce risks when the timing is right.

We provide a comprehensive approach to these issues, providing the necessary analytical tools and giving clients access to the full spectrum of investment solutions typically only available to the largest pension schemes.

Our approach is best summarised in five simple steps:

  1. ‘Joined-up’ conversations
  2. Understanding the liabilities, assets & risks
  3. Setting clear objectives
  4. Devising and implementing efficient investment strategies
  5. Monitoring, reviewing and refining

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