DB advisory services

As a defined benefit (DB) plan sponsor, you’re likely focused on long-term sustainability, eventual plan termination, or something in between, and the investment dynamics are increasingly complex. Wherever you are in your DB journey, we are here to help.

DB advisory: Getting you to your destination

Investment strategies today are more complex and dynamic than ever before. With regulatory and legislative changes, market volatility, and political uncertainty, you may be looking at a wide range of opportunities across the pension balance sheet.

Our DB plan advisory services seek to help you:

  • Pursue compelling returns
  • Reduce the size of your liabilities
  • Manage risk

Our DB advisory investment team examines the major and minor asset classes and market/return drivers to create an optimal strategic plan to meet surplus growth objectives with an appropriate risk profile.

Our experience and knowledge of the market allow us to construct a portfolio of managers and funds with strategic allocations that can potentially improve your returns.

Our DB advisory helps you build the skills you’ll need

Supporting your plan progress through its lifecycle
  1. Growth-driven strategy

    With benefit accrual ongoing, the investment strategy at this stage is to maximize long-term growth. As your advisor, we will provide guidance on the right risk posture and balance between risk and return.

    The asset allocation strategy can provide asset-liability modeling, examining risk and return and the impact on expected cash, balance sheet, and income statement. Your DB plan’s portfolio will consist, in broad terms, of a growth portfolio designed to close the deficit and a liability-hedging portfolio comprising fixed-income instruments designed to hedge long-term liabilities.

  2. Liability-driven strategy
    With benefit accrual soft or hard frozen, the DB advisory focus at this stage is on improving funded status and reducing volatility. As your advisor, we can monitor a daily feed of both assets and liabilities, making the information accessible to committees and providing quarterly performance reports.

    Given the growing prevalence of hedging strategies and funded-status triggers, these capabilities are not “nice-to-haves” but rather requirements.

  3. Exit-driven strategy

    The key goal here is to exit from the pension business focusing on liability-reduction exercises. Mercer has extensive experience in this area and can assist with the management of liquidity to:

    • Meet large divestments
    • Implement a strategy to hedge a potential risk transfer or to reduce frictional trading costs in paying an annuity premium
    • Manage the post-deal investment strategy    
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