Core elements of our ALM studies
- Coding of your pension plan(s), including any vested rights guarantees
- Projecton of cash flow, liabilities and balance sheet for up to 15 year horizon
- Analysis of structural and financial risk capacity
- Assessment of the current strategic asset allocation (SAA)
- Development of optimized proposals for new asset allocations
- Determination of the required investment fluctuation reserve
- Stress tests and comparison with other pension funds and peers
- Workshop training for the board of trustees and in-depth discussion of asset classes, ESG considerations, and governance matters.
Goals of an ALM analysis
ALM is mainly a risk management study. The Board of trustees of a pension fund is responsible for defining the objectives and the pension fund, the main principles of asset management and for implementing and monitoring the investment process. Our market-proven, dynamic ALM analyses make it possible to visualise the probable development of the asset and liability aspects of the Fund within realistic scenarios and propose sensitivity analyses and dynamic modeling.
From this, we can determine the risk capacity of the Fund and the probable development of the asset portfolio, cash flows and coverage ratio over the next 15 years. This provides the basis to optimize the strategic asset allocation and/or adjust the financing and design of the plan.
Technology for your benefit
More importantly, future returns and risk estimates for each available asset class are based on our proprietary capital market model calibrated for Switzerland, which has been continuously refined for over 25 years and is adjusted quarterly to capital market conditions.
The capital market model, together with our Swiss-developed instrument PensionCompass for the projection of cash flows and liabilities, enables us to accurately visualise all types of Foundations and even complex pension plans and vested benefits rights.
Why Willis Towers Watson?
Willis Towers Watson is one of the world's leading providers of Asset Liability Management (ALM) studies for pension funds. Our analysis of risks and market opportunities is based on independent, objective and measurable criteria. We take into account risk factors, such as illiquidity, or credit, which go beyond the traditional designation of investment categories and can therefore construct more robust and diversified portfolios, including ESG considerations.
