The unprecedented market turmoil since 2008 has caused a dramatic deterioration in funding levels for the majority of UK defined benefit pension schemes. In addition to the difficult discussions taking place regarding extra contributions, trustees and corporate sponsors are increasingly looking to understand the risks inherent in their arrangements and ensure that they:

• Maximise upside potential - at least in the short term; and,
• Put in place measures to prevent downside risks impacting to such an extent in the future.

Mercer has extensive experience in helping schemes and their sponsors develop a policy of intelligent risk management - which, in its simplest form, means understanding and proactively managing pension scheme risks.

The strategic framework for achieving this goal can be broken down into six key sequential steps. These are:

Review the risk management framework in detail