Is Your Pension Plan Immunized?

Advanced Capital Group’s Asset Liability Immunization Strategy (ALIS) is an innovative approach to assist with the management of pension plans. It uses a dynamic method for pension plan sponsors to stabilize their funding ratio and future contributions relative to traditional pension plan strategies. To counter the risk, Advanced Capital Group’s investment team offers a custom allocation, using individual fixed-income securities, in an attempt to match the plan’s hedging assets with the individual liability duration segments.  A high level of customization enhances the effectiveness of the plan’s overall hedge ratio and immunizes the portfolio against various forms of interest rate shocks.

Focus on future results

Traditionally, pension plan management has focused on maximizing returns.  ALIS rethinks this approach, and instead aims at stabilizing the plan’s funded ratio through the investment strategy, a dynamic asset allocation and cost-effective custom implementation.  If the goal of a pension plan is to meet future promised liabilities, then the investing objectives should be focused on delivering that promise. 

ACG’s fixed-income asset management team develops custom allocations which optimize the match between your plan’s liability and asset durations. This customization enhances the effectiveness of the plan’s overall hedge ratio and immunizes the portfolio against any interest rate shocks due to duration mismatches. This allow for an immunization strategy to be applied to plans of all funding levels.

READ OUR CASE HISTORY

What you can expect from an ALIS plan

ALIS plan sponsors have a desire to minimize funding volatility while stabilizing their required funding contributions.  A customized ALIS strategy allows defined benefit plan sponsors to stabilize their plan's funding ratio and have more predictable funding in a cost-effective manner.

• Tailored Approach - ACG’s collaborative approach seeks to understand each client’s specific risks, operating considerations and return requirements.
• More Cost-Effective - Pension assets invested in common pooled vehicles are often more costly than ACG’s tailored immunization strategy and less effective.
• Superior Results - Changing markets can increase the differences between pension assets and liabilities.  ACG’s hedging approach can align assets with liabilities to limit the tracking error.