Pension Derisking
Alka Gautum
Defined benefit pension plans are excellent retirement savings vehicles for employees but can submit employers to significant risks, which are usually outside the scope of their core expertise and mission. Corporate pension sponsors, by and large, have very significant pension obligations on their financial statements and typically do not want to be pension fund fiduciaries. They do not want to deal with the financial statement volatility, all of the administrative responsibilities, or the legal and regulatory risks that such an obligation demands. In short, companies really should not be in the pension business. They generally do not possess the necessary expertise to manage the related risks, and only the largest and the most sophisticated have the resources to properly oversee the accumulated pension assets and obligations.