Asked what they plan to look for in asset management searches in the next 12 months, the majority of mid-sized defined benefit (DB) plan CIOs said better risk-adjusted returns, and they plan to turn to private equity, real estate and hedge funds.
Tag: liability-driven investing
Mike Sasso, with Portfolio Evaluations, and a professor at Boston University, explained a new way of thinking to get plan sponsors to focus on retirement income for participants.
Speakers on a PGIM Fixed Income webcast offered practical steps pension plan sponsors can take today and over time to protect funding levels; they suggested liability-driven investing is a smart way to “get off the funded-status rollercoaster.”
The company is offering a lump-sum window, transferring some liabilities to a group annuity, making a contribution to its pension plan and transitioning to a liability-matching investment allocation.
Corporate DB plans have experience funded status improvement, and LDI strategies help plan sponsors preserve this; however, investment committees are looking for new asset classes that can provide greater returns at a reasonable level of risk.
This enables corporations to expense their contributions at a higher tax rate, according to Cerulli.
Eighty-one percent of pension plan professionals say funded status volatility is their top motivating factor for pursuing an LDI strategy.
As part of the analysis of pension investments, the PensionSmart Analysis tool can examine different investment “glide path” options to help sponsors achieve specific goals related to funding and liability matching.