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EGTRRA Permanency DB Plan Design Portability DB
Investment Consulting DC Plan Design
We
have already discussed the opportunity to engage plan
sponsors around Defined Benefit (DB) plan redesign as a
result of the Pension Protection Act (PPA). But the
implications of PPA on DB plans are much further
reaching.
PPA
will significantly limit the ability to smooth both
asset returns and liability values leading to increased
volatility in funding (contribution) requirements. With
contribution volatility driven by funding status, plan
sponsors will need to re-assess overall asset allocation
strategies and gain a better understanding of the
implications of managing assets to better match
liabilities. This potentially secular shift in thinking
will require guidance and expertise on the tradeoffs of
these approaches along with a better understanding of
provider investment management capabilities.
Consider asking plan sponsors if they have thought about
whether or not they have the right asset allocation in
place based on their overall plan goals, liabilities,
funding status, and risk tolerance? Do they have the
right investment managers in place? Convey your
consultative skills to reinforce your ability to provide
solutions.
Tune
in next time for a tip on taking advantage of defined
contribution plan design opportunities.
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