MDDS is an evolving product designed to be an end-to-end solution to help defined benefit plan sponsors manage their pension plans towards full funding while systematically reducing risk through a fully outsourced pension financial solution.
Managing pension risk has become a critical business issue as pension funded status has become an integral part of a company balance sheet. Similarly, trustees and sponsors of pension schemes are under increasing pressure to remove some of their investment risk as part of any recovery plans to rectify the Minimum Funding Standard (MFS) over time.
Mercer Dynamic De-risking Solution (MDDS) is an evolving product designed to be an end-to-end solution to help defined benefit plan sponsors and trustees manage their pension plans towards full funding while systematically reducing risk through a fully outsourced pension financial solution.
Why outsource dynamic de-risking to Mercer?
At Mercer we recognise the needs of plan sponsors and trustees and how MDDS can help optimise:
The value of your time – Plan sponsors and trustees have limited time and resources for plan management, when their focus should be on strategic issues that have the greatest financial impact. Mercer will take execution of plan strategy off the trustees’ hands.
The need for speed – In many cases, the traditional financial governance structure of quarterly committee meetings with a focus on past performance does not support the ability to react quickly to changing plan or marketplace considerations. Mercer will monitor the position regularly and execute to identify and capitalise on opportunities as they arise.
The benefits of integration – Dynamic de-risking requires sophisticated knowledge of assets and liabilities, supported by an integrated approach around risk reduction and actuarial advice. By combining renowned retirement and investment consulting experience with well-established investment implementation capabilities, Mercer offers plan sponsors and trustees a real and practical pension funding solution.
MDDS in Ireland provides a framework that enables investment strategy to change with movements in funding level and transforms the way plan sponsors and trustees implement and manage risk reduction plans.
MDDS - How it works
Mercer works closely with trustees/sponsors over a series of meetings to agree the overall funding objectives and to calibrate an affordable de-risking path.
The following steps are taken:
Long-term funding target is established
Time horizon and risk appetite are specified
Based on this, Mercer calculates the expected funding path and recommends a series of funding level bands crossed by this trajectory
Each band has an associated:
Target growth portfolio allocation
Downside protection level beyond which asset falls are minimised
The funding level is monitored daily by Mercer and is reported regularly via secure web access
If the funding level crosses upwards into a new band, this triggers actions implemented automatically by Mercer:
Reducing the growth portfolio allocation in line with the allocation of the new band
Increasing the downside protection level to the higher level associated with the new band
If the funding level falls to the downside protection level, this also triggers automatic actions by Mercer:
Downside protection implemented to reduce further losses
Protection maintained until funding level rises back into the previous band
+353 1 411 8277
|
Terms of use | Privacy |
Help | Site map | Mercer's Client Extranet