Having an effective global retirement strategy helps employers to make effective decisions and to anticipate change in a constantly evolving landscape.
Managing market volatility for defined benefit plans
[MUSIC PLAYING]
DAVID FINN: Most companies have closed their defined benefit pension plans around the world. However, stopping new benefit accrual does not mean that the plans have gone away. In 2022 there are over $26 trillion of defined benefit pension assets and liabilities globally. A colossal sum for the pension community to manage in the coming years.
Financially, the legacy plans present a lot of volatility. In 2022, we saw movements in price inflation and interest rates, causing large changes in pension metrics. This led to direct impacts on Company Accounting results and cash contributions. From the perspective of risk management, the UK liability-driven investment challenge in late 2022 demonstrated that strategies thought to be safe havens had substantial gaps under certain stress situations.