Defined benefit (DB) schemes cannot "survive bouts of market volatility" through liability hedging and a long-term investment horizon alone says Russell Investments.
Speaking to PP, head of liability driven investment solutions EMEA David Rae (pictured above) said volatility in risk assets was the biggest driver of funding level volatility for most schemes from the second-half of 2015 to now.
Therefore trustees at DB schemes had to be more proactive in their investment approach and react more quickly to market swings.
He said: "Success for pension fund trustees in this environment will come from managing and hedging risk exposures across the asset side of the balance sheet and dynamically managing the portfolio to take advantage of opportunities as they present themselves.
"Liability hedging will always remain important but it has been usurped on trustee agendas by risk management and return generation in volatile markets."
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
Companies could be overstating their pension liabilities by up to £60bn due to their life expectancy assumptions, according to XPS Pensions Group.
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.