Defined benefit (DB) pension schemes have been affected by:
Most trustee boards have limited resources with which to handle the challenges that their schemes face. Boards might only be able to meet a handful of times a year to apply what resources they have.
As a result, schemes can miss valuable opportunities to lock-in improved funding ratios during the good times. And they might be unable to manage downside risks during periods of market adversity.
Risk management solutions include a commitment to selling growth assets gradually and using liability-driven investing, protective equity options, enhanced transfer value programmes, longevity swaps, pension buy-ins and full scheme buyouts.
We believe that no single tool is a panacea. The suitability of each strategy should be monitored continuously in light of prevailing market opportunities.
Mercer Dynamic De-risking Solution (MDDS) is designed to bring order, discipline and new operational capabilities to DB fund management. It can transform the way in which schemes develop and manage their risk reduction plans.
Mercer is uniquely positioned to provide scheme sponsors and trustees with a real and practical solution to their pension funding challenges.
MDDS brings together Mercer’s renowned retirement and investment consulting experience with its established and highly successful implementation capability.
Mercer works closely with trustees and sponsors to agree the overall funding objectives, and to calibrate an affordable de-risking path.
The following steps are taken:
The following chart illustrates how this works:
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