CFO.com | NEWS August 2018

Is It Time to Rethink Pension Contributions?

Justin Teman, senior investment director and actuarial specialist, published a report encouraging corporate plans to think beyond the September 15, 2018 tax deadline when it comes to making contributions and helping to ensure the plan is set up for long-term success. The report was published as a contributed article on CFO.com and an excerpt is as follows:

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.

This article was republished on CFO.com in full, which can be found online here, or on Cambridge Associates’ website here.