By Dave Chittim, Senior Vice President and Al Trezza, Vice President, Mellon Asset Management

The recently enacted federal Pension Protection Act creates tension between competing objectives for pension plan sponsors, such as maximizing return while controlling market risk. Good asset-liability management is key to helping sponsors balance those objectives, and that makes plan monitoring more important than ever.

New rules under the law that involve marking-to-market and accelerated amortization mean that adverse market movements will affect a sponsor’s financial picture sooner. The increased exposure to financial statement volatility will force plan sponsors to evaluate their plan’s position more frequently. Sponsors will have to be willing to adjust asset allocations as conditions dictate. This paper addresses all facets of the plan monitoring on an ongoing basis.

For more information and a hard copy, please contact Peter Austin, Executive Director, Mellon Asset Management, at 617 248-6202.

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management product.