iRFM interConnections - linking assets and liabilities 

May 2009

As pension plan sponsors navigate through the second "once in a century" pension crisis that has developed in the last decade, they are reconsidering many aspects of their pension risk. While short-term questions about the best course of action during the next year or so are important, this article focuses on longer-term issues.

Risk and response: Getting commercial

December 2008 

With the increased interest from the market in plan de-risking, it feels as though we have waited an age for this awareness to emerge, and now everything has come at once. The danger now is in choosing quick solutions that might not fully deliver. Many solutions are being offered, so pension risk managers need to evaluate all solutions carefully and choose the one that best meets their objectives, while working within their internal constraints. 

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Managing Global Pension Risk

December 2008

Using Mercer's Integrated Retirement Financial Management (iRFM) framework, many sponsors of DB pension arrangements have understood the risks and in some cases adopted globally consistent policies for measuring and managing them.

Letter to Treasury Secretary: US Emerging pension contribution crisis: MMC/Mercer analysis and recommended relief

November 2008

Brian Duperreault, MMC's President & CEO, has submitted comments and recommendations to the Treasury Department concerning defined benefit plans receiving relief from increased pension plan contributions stemming from the combination of the current economic crisis and the provisions of the PPA. These comments and recommendations were communicated in a letter to the Secretary of the Treasury, Henry Paulsen.

 Emerging pension contribution crisis: MMC/Mercer Analysis and Recommended Relief

2008 survey of pension financial risk

November 2008
 

During June and July 2008, Mercer Limited and the Association of Corporate Treasurers approached the CFOs and treasurers of substantial companies in their fourth annual survey on managing pension financial risk. 

This survey sought to determine the extent to which respondents view pension schemes and their deficits as significant corporate risk issues, their perceptions of stakeholder attitudes, and the prevalence of some specifi c and topical risk management actions. 

This report summarises the 89 responses received, mainly from FTSE 350 organisations.

Longevity bulletin

November 2007

Longevity remains the last unresolved part of the ‘pension puzzle’. Shareholders, pension schemes and individuals are all exposed to the cost of people living longer. This is a real – and often a growing – issue for many pension schemes (see Past improvements in life expectancy).

iRFM interConnections - Minding the 'gap': Credit spreads and LDI
October 2008 

Welcome to the first edition of Mercer’s new series, iRFM interConnections. We will be providing you with regular issues of this publication to keep you updated on current issues related to the management of financial risk in pension plans, with a focus on the major policy levers that control financial risk – investments, contributions and benefits design – as encapsulated in Mercer’s Integrated Retirement Financial Management (iRFM) framework. We will address issues related to strategy, implementation, and ongoing management that are essential in developing and executing an effective risk management program. 

Top 10 myths about liability-driven investing  

July 2008 

It seems like only yesterday that Liability Driven Investing (LDI) was an interesting academic idea with few “real world” proponents among pension plan sponsors. Now, LDI regularly makes the front page of pension industry publications and is widely accepted as a practical and effective risk management framework. Plan sponsors implementing LDI strategies were “mavericks” only a few years ago; now they are “cutting edge.” For such a new area, LDI seems to have more than its fair share of experts. And there is a surprising diversity of opinions on what it is and what best practices are. We define LDI as an investment strategy that is set with explicit reference to liabilities. Any return objectives must be carefully weighed against the plan funded status (surplus/deficit) risk implications. While we think that there is genuine merit to much of what LDI has to offer, this article addresses the top 10 myths about LDI. 

Pension landscape: The risk-free road

December 2007 

Historically, it has been taken for granted that, in the same way running a car takes its toll on people and the environment, managing a pension plan comes with risks - a regrettable but unavoidable consequence. But just as modern technology can reduce the carbon footprint we leave when driving from A to B, pension sponsors are seeing new techniques for reducing risks in pension schemes, especially those approaching their endgame. Recently, the tools and their providers have expanded dramatically, with a bewildering array of solutions available. This article seeks to put the markets back on the map, allowing you a smoother journey to a risk-free pension scheme.

Equity options for pension funds

June 2007

The investment landscape facing pension fund trustees and corporate sponsors has changed significantly in recent years, with the range of investment strategies now available broader and more diverse than ever before.

This allows risk and reward to be controlled and managed to a greater extent, but also substantially increases the already heavy burden of education required for trustees to decide how to invest appropriately the assets they are responsible for. This burden is especially heavy in the case of complex strategies involving financial derivatives.

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