DB advisory services

With benefit accrual ongoing, the investment strategy at this stage is to maximize long-term growth. As your advisor, we will provide guidance on the right risk posture and balance between risk and return.

The asset allocation strategy can provide asset-liability modeling, examining risk and return and the impact on expected cash, balance sheet, and income statement. Your DB plan’s portfolio will consist, in broad terms, of a growth portfolio designed to close the deficit and a liability-hedging portfolio comprising fixed-income instruments designed to hedge long-term liabilities.

With benefit accrual soft or hard frozen, the DB advisory focus at this stage is on improving funded status and reducing volatility. As your advisor, we can monitor a daily feed of both assets and liabilities, making the information accessible to committees and providing quarterly performance reports.

Given the growing prevalence of hedging strategies and funded-status triggers, these capabilities are not “nice-to-haves” but rather requirements.

The key goal here is to exit from the pension business focusing on liability-reduction exercises. Mercer has extensive experience in this area and can assist with the management of liquidity to:

• Meet large divestments
• Implement a strategy to hedge a potential risk transfer or to reduce frictional trading costs in paying an annuity premium
• Manage the post-deal investment strategy