New Priorities for Plan Sponsors: Match Pension Liabilities First. Allocate Assets Next. Then Choose Investment Managers.

Sponsored By Barclays Global Investors

Topics:

Compliance & Governance > ERISA/HIPAA

Employee Benefits & Human Capital > Defined Benefit

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Abstract:

An economic "perfect storm," in combination with recent regulatory changes-chiefly FAS 158 and the 2006 Pension Protection Act (PPA)-poses unprecedented challenges for defined benefit pension plans and the companies that sponsor them. At CFO Rising 2008, Barclay's Global Advisors warned that a conventional "asymmetrical" view of pension plan risks encourages plan sponsors to make poor decisions distorted by the potential upside. A three-tier approach makes better sense. Address the risk of the liability, hedge out risks that can be hedged, and then assign the remaining capital to a return-seeking portfolio that may include alternatives. That perspective restores prudent risk and return dimensions, aligning underlying pension plan economics with regulatory and reporting requirements.

DETAILS

Sponsored by: Barclays Global Investors

Posted: July 08, 2008

Length: 8 pages

Format: PDF (228 kb)

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