Investment strategy is a key risk taken within a pension fund and sponsors of DB pension schemes should engage pro-actively with Trustees regarding the scheme’s investment strategy, to ensure that the strategy is aligned with the sponsor’s objectives. Objectives can be set by reference to cash funding requirements, p&l or balance sheet.
Investing in assets that provide a closer match to a pension scheme’s liabilities, for example bonds and swaps, can significantly reduce the volatility of a scheme’s funding position and thereby reduce risk. Within particular asset classes, a scheme’s portfolio can be designed to match the scheme’s pension cashflows to further reduce volatility and risk.
Our specialist investment team advises sponsors and Trustees on all aspects of investment strategy. In relation to risk management strategies, the support we offer includes: