Artists rely upon palettes with dozens of paints to create their visions on canvas, often combining and mixing colors to obtain the right effect. The fuller the palette, the more flexibility they have to ultimately inspire and delight art lovers.
Scientists, on the other hand, rely on hard data to help guide their conclusions and better understand the universe. Without the right data, we cannot learn and progress.
Sponsors of defined benefit pensions need to rely on a balance of both art and science to create a vision of retirement security when managing investments. Sponsors need investment palettes with a wide range of investment options and money managers to help create the right balance between risk and return. But sponsors also need data that provides insights into the performance of the plan and its investments, and flexibility to make necessary changes in order to reach or maintain appropriate funding levels and help manage risk.
MassMutual, understanding the importance of choices and flexibility as well as data to help reach goals for retirement security, is introducing a new investment platform designed specifically for defined benefit (DB) pension plans. The new platform was designed in collaboration with Matrix Financial Solutions, a Broadridge Financial company.1
The design work and creation of the new platform was done with an eye towards simplifying the process of evaluating and selecting investment options for DB plan sponsors and their financial advisors. Meanwhile, MassMutual’s DB pension team will continue to provide a consultative, client-focused approach in support of the new platform. MassMutual’s pension experts typically work with plan sponsors and their advisors to assess the health of pension plans, the effectiveness of the plan’s investment options, and assist with recommendations to the plan’s sponsor and advisor about appropriate strategies.
Having a more flexible pension platform is more important than ever. During the recent bull market, funding ratios for defined benefit pensions on average became healthier. Recently, however, U.S. corporate pension plans overall are experiencing increased funded status volatility due to interest rate changes and gyrations in the asset market.
Increased market volatility and less certainty about the direction of the economy, among other factors, are complicating today’s investment decisions. As returns on stocks and yields on bonds fluctuate, it’s more important than ever for plan sponsors and advisors to have choices in the types of investments available to fund pension obligations and manage liabilities. Plan sponsors and their advisors may want to revisit investment glide paths to monitor whether they are maintaining the right balance between exposure to risks, hedges and funding status.
Generally, plan sponsors look to decrease a plan’s exposure to risk and protect against market downsides as the plan’s funding status improves. Any deterioration of that status may necessitate other investment changes.
And that’s where MassMutual’s consultative approach comes in. Our DB consultants focus on the “funded status volatility,” which involves asset allocation, liability movement and company contributions. The analysis enables MassMutual to provide options for sponsors and advisors to appropriately reallocate pension assets to achieve desired investment returns and balance risk considerations.
With MassMutual’s new investment platform, sponsors and their advisors can more closely monitor their plan’s performance through enhanced self-service reporting capabilities for easier, simplified administration. Sponsors and advisors can generate in-depth reports, measure investment performance against benchmarks, and create custom reports on individual plans.
Ultimately, we’re working to simplify complex issues to help plan sponsors more effectively manage their pension plan risks, achieve their pension plan goals, and honor their promises to workers and retirees. Managing a pension is equal parts art and science, and MassMutual wants to help plan sponsors and advisors master both.
To find out more about how this new investment platform can possibly help your company or client, contact us at DMOConnor@massmutual.com.
1 Neither Matrix Financial Solutions, nor Broadridge is affiliated with MassMutual or any of its subsidiaries.