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IPE special report May 2018

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Mercer mulls Europe launch for frozen DB service

EUROPE – Mercer Human Resource Consulting is seriously considering bringing its new service for US frozen defined benefit pension plans to Europe.

The Mercer Frozen Plan Solutions programme is aimed at helping employers with the financial and fiduciary risks of frozen DB schemes.

Mercer HRC worldwide partner Gordon Clark told IPE the matter was under “serious consideration”.

“Frozen DB plans are a very big issue and important to many of our clients,” he said.

“The Mercer Frozen Plan Solution is taking it a step further – implementation in addition to consulting advice.”

Mercer HRC in the US announced plans this week to roll out the programme, which aims to assist employers establish a “thoughtful strategy for eventually winding down the plan, as well as a means to offload its ongoing management”.

Employers often close DB schemes to cut costs and reduce financial volatility, said Mercer.

“But an employer’s fiduciary obligation does not end when a plan is frozen, and freezing a DB doesn’t immediately eliminate financial risk,” it continued.

Mercer has therefore proposed a three-tier financial management strategy involving setting the strategy up, implementing the investment strategy, and managing the plan to a “target endgame” according to employers’ business objectives.

Mercer, Mercer Retirement Solutions and Mercer Global Investments will play integral roles in the planning, implementation and management of this strategy.
“It is being done by Mercer to seek global solutions for the benefit of our clients,” said Clark.

He could not say when implementation might start in Europe, but he stated that Mercer “is extremely well-placed, having all the necessary parts of the jigsaw”.

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