With continuing economic uncertainty, market volatility, fluctuating interest rates plus increasing longevity, managing DB pension risk is a critical business issue. Mercer is well positioned to support clients with consulting advice and solutions that address all aspects of pension risk management.
What makes managing DB pension risk such a hot topic?
- Corporations have committed billions of dollars in additional funding to secure faltering defined benefit pension plans
- Volatility in equities markets means sponsors need to be proactive about implementing well-managed investment strategies
- Falling corporate bond yields have put pressure on balance sheets and cash requirements
- Changing funding rules in some markets may potentially affect the timeline for exiting frozen DB plans
- Equity analysts’ and credit rating agencies’ views on pension liabilities have had a negative impact on some companies share price, credit rating, cost of capital and business sale value.
- Increased fiduciary responsibility and complexity in managing and providing a retirement program for employees/retirees
- Changing accounting standards and regulations have increased the transparency of pension risk and its potential impact on a business