A news release said the starting point is partnering with the plan sponsor to define the plan’s “endgame“ – whether long-term sustainability or termination – and then designing a customized “de-risking glide path” to reach that point smoothly and efficiently. With the strategy determined, the next step is for Aon Hewitt to assume responsibility for overseeing the ongoing investment management of the plan.
“Execution and monitoring of the strategy are key to its success. It’s a challenge for many plan sponsors to monitor market fluctuations and react sufficiently quickly to reduce the economic risks and costs of the plan,” said Étienne Dubé, a vice-president in Aon Hewitt’s Montreal office, in the news release. “As a result, some adopt a ‘wait and see’ attitude, simply hoping for positive market returns and higher interest rates to improve their plan’s funded position. Unfortunately, that sort of approach can result in a real drop in the funded status of the plan.”
The end result of Aon Hewitt’s delegated investment consulting approach is managed pension plan risk, with decreased balance sheet volatility, according to the company.