U.S. pension plans regularly perform asset analyses to gauge how their fund’s strategy is performing. Usually, they hire an external investment consultant to review the portfolio. While this is a beneficial and necessary exercise, it doesn’t go far enough.
At Ortec Finance, we believe a more holistic review process known as asset-liability management (ALM) leads to better investment decisions. In addition to analyzing the asset side of the balance sheet to determine whether a pension plan can achieve its long-term objectives, ALM examines the liability side, too. It identifies potential sources of risk, trends in contribution levels and scenarios where the plan could potentially fail to meet its commitments.
Asset and liability-related decisions cannot be made in isolation – rather, they are interdependent. How the liabilities behave ultimately affects what is the best investment strategy. Anticipated investment returns and risk may prompt changes on the liability side. This approach helps trustees better understand the many pension-related dynamics, which leads to better strategic decision-making. It helps fund managers achieve objectives that reflect the interests and risk appetite of all stakeholders.
Contact
Richard Boyce
Managing Director CanadaRelated Insights
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23 April 2024Climate risk workshop for pension funds and insurersFeaturing our climate experts and special guests from Cambridge Institute of Sustainability Leadership, The Pensions Regulator and Cambridge Econometrics
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17 April 2024Quarterly Pensions Investments ReviewThe Quarterly Pensions Investments Review is a comparison in expected risk and investment return.
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17 April 2024PRESS RELEASE: Ortec Finance’s 2024 climate scenario update – Key highlightsImpacts of current El Niño anticipated to lower global GDP by 0.25% over the next two years and affect all asset classes
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09 April 2024PRESS RELEASE: Ortec Finance releases integrated economic and climate scenariosFind out more about the industry’s first integrated economic and climate risk management tool.
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26 March 2024Insurers need strategies to manage increasing complexityStudy shows a need for greater transparency and regulatory pressure is driving insurer spending on scenario analysis and stress testing.
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19 March 2024In-House Student Day: Thursday 30 May, 2024 - RotterdamCalling all students! Join us for an unforgettable day of insights and inspiration at our exclusive In-House Student Day.
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12 March 2024WEBINAR: 2024 Ortec Finance Climate ScenariosLearn how to utilize Ortec Finance’s 2024 climate scenarios to help inform investment decisions
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