Is It Time to Rethink Pension Contributions?

While the focus on making contributions prior to the mid-September tax deadline is important, it should be the first step in establishing a dynamic contribution roadmap. Especially given mounting contribution requirements ahead, plan sponsors should take this opportunity to view their contribution policy as one available lever—along with asset returns, liability hedges, and benefit management—in navigating the pension plan to a strong financial position. Adopting a comprehensive strategic plan for the pension that aligns with broader organizational objectives is also critical to success.

Contribution strategy should be actively managed in the same way that asset allocation, portfolio construction, and manager selection are reviewed regularly. To be effective, it requires ongoing oversight and should allow for adjustments as markets and company capital needs change over time. Ultimately, a well-executed contribution strategy can shift the focus away from underfunded pension plans and toward the core strategic initiatives that will help drive the company forward.