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Continued Focus on Pension Risk Reduction for 2015 and 2016

According to a recent Mercer survey of pension plan executives, companies are increasingly stepping up their focus on risk reduction activities for the remainder of 2015 and into 2016. More than half of pension executives are aiming to focus on implementing and enhancing their glide paths (64%), increasing allocations to fixed income investments (60%), adjusting duration of fixed income investments to better hedge liabilities (61%) and making greater use of synthetic instruments and derivatives to limit risk (45%). Notably, most of these activities are seeing a twenty percentage point jump in interest in just the last two years. Additionally, Plan Sponsors who have implemented these steps in the last two years report a high-level of satisfaction with the outcome, with more than 80% of executives reporting being satisfied or very satisfied with the result. (Source: Mercer/CFO Research 2015 Risk Survey, “Taking the next step in pension risk management planning to move ahead”)