With rising costs and increased balance sheet risk, managing a defined benefit plan is a significant issue facing plan sponsors in today’s environment. To help address these concerns, Aon Hewitt has introduced its delegated investment consulting solution.
A consultant and plan sponsor first define the plan’s endgame (whether that be long-term sustainability or termination) and then design a customized “de-risking glide path” to reach that point smoothly and efficiently, with Aon Hewitt assuming responsibility for overseeing the ongoing investment management of the plan.
“Execution and monitoring of the strategy are key to its success. It’s a challenge for many plan sponsors to monitor market fluctuations and react sufficiently quickly to reduce the economic risks and costs of the plan,” said Étienne Dubé, a vice-president in Aon Hewitt’s Montreal office. “As a result, some adopt a ‘wait and see’ attitude, simply hoping for positive market returns and higher interest rates to improve their plan’s funded position. Unfortunately, that sort of approach can result in a real drop in the funded status of the plan.”