Top Considerations for Defined Benefit Plans
We encourage defined benefit (DB) plan sponsors to note the lessons learned and plan accordingly for the impact of the new environment on their financial realities. The considerations outlined in this paper address a range of topics, from the effects of the COVID-19 pandemic to opportunities for diversification, rebalancing and risk-transfer strategies to the routine exercise of setting financial assumptions.
Mercer’s consultants are ready to guide you through each of these issues:
- Is inflation an issue for DB plans?
- Should sponsors be reviewing their interest rate hedge ratios to take advantage of low rates?
- How should sponsors hedge their plan termination liability?
- What fiduciary challenges do sponsors of both DB and DC plans face?
- How should sponsors reflect environmental, social and governance issues in their policies?
- Should dynamic asset allocation play a role in strategy?
- How can corporations manage risk on a global basis?
- How can plans benefit from capital efficient strategies?
- What liability should be the basis of a plan’s glide path?
- How would an open-plan strategy differ from that of a frozen plan?
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