The objective of an investment strategy is to enable the long-term fulfilment of the pension promises financed through the pension fund. The benefit and financing strategy must also allow for a sufficient investment return to be achieved in order to guarantee high benefits for the insured members over the long term.
A pension fund is subject to external influences that significantly affect the scope for designing the benefit parameters, financing and investment strategy. When setting the benefit level and investment strategy, it is crucial to have a precise understanding of the elements of risk capacity.
How we can support you
ALM studies enable you to make informed decisions when it comes to determining an investment strategy that is tailored to your situation. The studies also contribute to a comprehensive understanding of the current asset and liability situation and show how these interact with the objectives set by the Board of Trustees.
You can identify areas for action regarding the performance, funding and investment strategy and understand their consequences. Mercer can break down investment returns into underlying risk factors that make the contribution of individual investment risks more transparent. An investment strategy can then be developed based on the identified return requirements, risk capacity and appetite, liquidity requirements, permissible asset classes and the situation in the financial markets
This is how we can support you in the area of ALM:
Reviewing the risk capacity and financing of the pension fund benefits.
Recommendation of alternative benefit strategies.
Matching the investments to the pension fund's situation (investment strategy, benchmarks, bandwidths, implementation).
Recommendation on technical parameters and fluctuation reserve.
Stress testing with investment and liability-side scenarios