Between Two Worlds
The maturing populations in European countries are beginning to have an impact on pension fund investment strategies. As the number of pensioners grows and as member life expectancy lengthens, pension plans (and insurance companies that offer group and individual pension policies) need greater certainty that their investment portfolios can generate returns to meet their pension benefit obligations.
At the same time, however, they don’t want to miss opportunities for outperformance that can give the plans a savings cushion in the event of unexpected downturns. The conundrum facing today’s pension and investment managers is how to achieve the certainty of bond-like yields, while still selecting higher-risk/higher-return assets that can enhance overall portfolio returns.
Above all, pension fund trustees — aided by their in-house and external investment managers — are fiduciaries responsible for