Withcutting-edge risk management platforms, a lot of the legwork isalready taken care of, enabling reaction times to be transformedfrom weeks or months, to a matter of days. (Photo:Shutterstock)
Managing risk is a growing priority for U.S. defined benefit(DB) pension plans. Market shifts, tax deductions and changes inaccounting procedures — combined with rising Pension BenefitGuaranty Corporation (PBGC) premiums — are driving DB plans toassess how soon they want to terminate and the best way to do it.Having effective risk management solutions can help plans respondefficiently and take advantage of such developments.
Historically, pension plan funded status was only calculatedonce or twice a year. Indeed, prior to technology developments, ifa market movement occurred, actuaries would be required to go backto a liability valuation system, roll forward the most recentyear-end figures to the most recent date, and gather updatedinvestment information from their investment advisor partners. Bythis time, a couple of weeks could have passed by and a chance tolock in funding improvements may have been missed, as the marketmay have corrected.
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