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Many companies are struggling with substantial pension legacies. These legacies have an onerous drain on the financial resources of the companies, resources that could much more effectively be spent in growing the business. Even more worrying is that the pension funds still expose sponsoring companies to substantial risks.
Resolving the existing and potentially significant pressure on the business from these legacies clearly needs the attention of the company at the highest level. The key aspects the company needs to look at include:
- What are the current risk levels, and how does this compare to the risk the company can bear?
- What is the strategy to move the pension plan to a low/manageable risk and cost position?
- How can the company effectively work with the pension plan trustees to execute the optimal strategy?
The optimal approach is heavily influenced by the industry in which the company does business. Companies in certain industries are already putting a risk management process in place that is specific to the demands of their environment.
A version of this article was first published in gtnews, 19 May 2011. Please be aware subscription (free) is required to view this article on gtnews.
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Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges.
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