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Canadian pension plans take action to better manage the risk



27 July, 2017 09:45

Photo : Freepik

While the solvency ratio of the pension plans reached heights unseen in the past 10 years, plan sponsors are trying to actively respond to the challenges posed by the markets and changes in regulation, according to a study ofAon.

The survey, which interviews the leaders of 124 retirement plans with nearly 1.5 million participants, reveals that the promoters are adopting a new approach to the management of risks and investments, to adapt to the constant changes in the capital markets. In addition, the survey indicates that the proponents to respond proactively to the reform of the law on pensions of the different provinces and territories.

«A three-dimensional approach»

«Pension plans have the opportunity to adopt a three-dimensional approach that focuses on diversification, risk reduction and the dynamism to respond to changes, said Claude Lockhead, partner executive of the practice, Retired from Aon Hewitt. The need to adopt strategies responsive is particularly evident in the provinces and territories have amended their legislation on pension plans, as the poll reveals that the proponents reconsider their funding strategies and investment. «

Thus, 92 % of plans that possess a long-term strategy to achieve their goals, plan sponsors in the private sector adopting more active measures to reduce the risk that the public sector pension plans, whose priority is the stability of costs.

Adapt its strategies

In addition, although plan sponsors have at their disposal the tools to help understand and manage the risks of pension plans, 90 % of them do not continue to measure their progress against their objectives in the long term.

Finally, it is noted that plan sponsors adjust their investment strategy to the economic environment of low interest rates and valuations high : 30 % of them have reduced the weighting of bonds, the most invest or think about investing in investments that are less traditional, such as real estate (82 %), and infrastructure (79 %), and a growing number (25 %) use of external consultants to implement the investment policies (advisory solutions active management of investments).


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