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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18 December 2024Climate change could erode Canadian pension fund returns by 44%Ortec Finance releases inaugural Canada pension fund climate risk report, analyzing the average portfolio allocation of the Top 30 pension funds in Canada by AUM
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17 December 2024Climate risk assessment – Top 30 Canadian pension fundsDiscover how climate change impacts the top 30 Canadian pension funds through an analysis of their climate risk exposure, using Ortec Finance Climate Scenarios.
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17 December 2024Assessing the climate risk exposure of pension funds and insurance companies worldwideAccess a series of Ortec Finance reports to examine how climate risk exposure and resilience vary among pension funds and insurance companies worldwide
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17 December 2024PRESS RELEASE: US pension plans report possibility of increasing contributions despite improved funded status8% of pension plan managers say their funded status has improved over the past year, study shows
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16 December 2024Climate risk assessment – Top 30 US pension fundsDiscover how climate change impacts the US pension fund industry through an analysis of their climate risk exposure, using Ortec Finance Climate Scenarios
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16 December 2024US pension funds most sensitive to climate changeOrtec Finance releases inaugural US pension fund climate risk report, analyzing the average portfolio allocation of the Top 30 pension funds in the US by AUM
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11 December 2024Climate risk assessment – Top 30 UK pension fundsDiscover how climate change impacts the top 30 UK pension funds through an analysis of their climate risk exposure, using Ortec Finance Climate Scenarios.
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11 December 2024UK pension fund investment returns could reduce by 30% in a high warming stress scenarioOrtec Finance releases inaugural UK pension fund climate risk report, analyzing the average portfolio allocation from the Top 30 pension funds by AUM
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09 December 2024Climate risk assessment – European pension fundsLearn how climate change impacts European pension funds, via an analysis on a reference portfolio that represents their average asset allocation.