How to manage a pension plan's impact on corporate finances

October 12, 2021

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Jim Gannon, CFA, FSA, EA

Jim Gannon, CFA, FSA, EA

Growth in pension liabilities, along with new disclosure requirements and accounting standards, have led defined benefit pension plan sponsors to consider corporate finances as they manage their plan.

The three main areas where the finances of a pension plan can affect financials are the balance sheet, the income statement, and the corporate cash flow statement. To offset the impact of pension volatility on corporate finances, sponsors are increasingly using a combination of plan design changes, asset allocation adjustments, and liability transfers.

This paper explores how pension plan risk can affect corporate finances–and the strategies sponsors can use to mitigate that risk.

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