optimizing the pension plan’s growth engine is more critical, and challenging, than ever
Many corporate defined benefit (DB) plans experienced significant funded status gains in recent years, driven by plan sponsor contributions, rising liability discount rates, and, until recently, strong equity market returns. Recent capital markets volatility, however, has set many plans a few steps back, re-focusing plan sponsors on both protecting long-term funded status gains and closing the asset-liability deficit. Indeed, plan sponsors of all stripes, even those that are well on their de-risking journey, still need to generate meaningful asset returns, not just to close deficits, but also to fund pension risk transfers and offset ongoing plan administrative expenses. Given increased volatility in global equity markets, relatively high valuations in many market segments, and the late stages of the economic and credit cycles, optimizing the plan’s growth engine is more critical, and challenging, than ever. This publication provides a framework for how to do so in the context of the evolving market environment.
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