Mercer Canada | Optimizing Risk for Defined Benefit Plans

Defined Benefit Destinations: Optimizing Risk for Defined Benefit Plans

Our Thinking / DB Destinations

Are you Optimizing your Defined Benefit Plan’s Investment Risk?
Are you optimizing you Defined Benefit Plan’s Investment Risk?
Calendar06 September 2017

If you want your defined benefit pension plan to continue to meet your liabilities, you’re wise to include risk in your portfolio. Risk comes in many forms. It’s an inherent part of any portfolio. New and emerging frameworks are forcing people to rethink how much they’ll take on and how they deal with risk in their DB plans.

How much pension liability risk do you need?

You need to ask yourself not how much pension liability risk you’ve taken on, but how well you’re managing the risks associated with your DB plan. Any plan review should include a risk assessment—and a plan to optimize and boost the plan’s performance.

Low interest rates, market volatility, and even how long your plan members are living affect your DB plan portfolio. The good news is you have a number of tools for managing such risks, including liability driven investment strategies, such as interest rate swaps, and pension risk transfers, such as annuity purchases.

Today’s DB plans need to accept more risk in order to realize higher returns. You have more incentive than ever to accept risk—and more options to handle them effectively.

Optimizing your Plan

Simply by undertaking steps to optimize your plan risks, you can:

  • Take advantage of liquidity in your budget
  • Reduce your equity risk
  • Reduce portfolio volatility
  • Realize higher returns
  • Create more efficient growth
  • Get better insights about what the future may hold

Feel confident, even in volatile times

As pension plans continue to evolve, so too do strategies for managing them. You can optimize your DB plan to help you weather any storm. Rocky markets and low interest rates need not bother you!

This whitepaper explains what you can do to get your plan on the path to providing greater rewards.

You’ll discover the simple steps forward to a better DB plan future:

  1. Measurement and Analysis. What to look for when you review your DB plan and how better insights can inform your strategies.
  2. Optimization. The tools you can use and how to leverage them to get the best results.
  3. Due Diligence. How good management and good planning can make your DB plan more effective.
  4. Good Advice. How a partner like Mercer can assist you in optimizing your pension plan risks.

Ready to get started on your path to your DB destination? Download the report.

 

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