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Pension Governance, LLC Releases Retirement Plan Risk Management Study

Posted on: Monday, 13 October 2008, 12:00 CDT

During this credit crisis, employees want to know if their retirement plans are at risk. Are retirement plans being properly managed or vulnerable to loss because of volatility in the credit and capital markets? Do retirement plan decision-makers hedge credit and price risks? What keeps pension fiduciaries up at night? Are pension trustees adequately reviewing risks before deciding to use derivatives or invest in hedge funds or private equity pools? These and many other critical topics are addressed in a new study entitled "Pension Risk Management: Derivatives, Fiduciary Duty and Process." Authored by Dr. Susan Mangiero, CFA, President of Pension Governance, LLC, and funded by the Society of Actuaries, this research seeks to: (1) understand why and how pension plans employ derivative instruments, if they are used at all (2) identify what plan sponsors are doing to address investment risk in the context of fiduciary responsibilities and (3) assess if and how plan sponsors vet the way in which their external money managers handle investment risk, including the valuation of instruments which do not trade in a ready market. An Accredited Valuation Analyst, certified Financial Risk Manager and Accredited Investment Fiduciary Analyst, Mangiero urges investment fiduciaries to adopt comprehensive pension risk management policies and procedures, if not already in place. "The handwriting is on the wall. Economic losses that impact Main Street retirees are almost sure to result in further rules and regulations, in the United States and around the world. Effective pension governance is important as never before. We hope this study informs and motivates investment fiduciaries who are in need of a jump start to adopt best practices."

Pension Governance, LLC is an independent research, analysis and training company that provides process checks, plan sponsor and service provider education and business intelligence about risk management, valuation and investment fiduciary issues.

Source: Business Wire

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