MONITOR PRO ENABLING KEY MONITORING WHEN YOU NEED IT

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1 H E A LT H W E A LT H C A R E E R F U N D E D S TAT U S MONITOR PRO ENABLING KEY MONITORING A N D S T R AT E G I C A N A LY S I S WHEN YOU NEED IT

2 INTRODUCING MERCER FSM P ro Pension schemes need simple access to reliable information. Mercer s Funded Status Monitor Pro (Mercer FSM Pro ) has been at the forefront of providing access to this information since 2012 helping provide robust scheme monitoring across the globe. In the UK alone, Mercer FSM Pro is currently monitoring over 400 plans with combined assets of over 350 billion, representing a significant proportion of the UK DB market. BENEFITS OF MERCER FSM P ro With Mercer FSM Pro, plan sponsors and trustees are up to date with key financial information and can take greater control of their plan s future development through: UNDERSTANDING RISK Better understanding of the impact of market movements and changes to the key assumptions as well as the risks inherent within plans POSITION MONITORING Easily view current, historic or future projected positions to help anticipate year end positions for accounting or annual funding updates FORECASTING Link directly to future forecasts for examining P&L and recovery plans, including future contribution strategies WHAT-IF ANALYSIS Perform powerful what if analysis around financial and demographic assumptions RISK EXPOSURE Explore easy to understand value at risk exposures ADVANCED WARNING Support your de-risking mechanism with notifications as and when trigger metrics are hit BUYOUT Explore the powerful buyout module showing the cost of winding-up a plan based on actual monthly insurer transaction experience CONSISTENCY Ability for both plan sponsors and trustees to perform consistent analysis using a familiar platform AGGREGATION Can combine multiple plans to provide an overall picture for multi-plan sponsors or trustees, including multiple geographies

3 MERCER FSM P ro Not only provides online information on a daily basis but underpins a strategic approach to managing pension risk. Mercer FSM Pro supports the three critical stages in assessing pension risk: 1. MONITOR Monitor the plan s funded status frequently and understand your risk exposure. 2. SCENARIO ANALYSIS Forecast the financial performance of the plan under different variable assumptions and economic scenarios. 3. MANAGE Assist in developing a funding roadmap and taking action at the right time.

4 1. MONITOR Regular monitoring of a plan s funding position supports timely strategic decision making and increased understanding of the impact of daily economic movements. Assets and liabilities can be tracked daily on multiple bases for example, accounting, statutory funding or any other required basis by reference to changes in yields and asset indices, with full analysis of the reasons for changes to asset and liability values Results can be recalibrated on a regular basis to update for known changes (for example, significant benefit payouts or actual plan asset returns) Users can make adjustments to the major financial assumptions and longevity assumptions, in order to view their impact on the financial position Multi-plan aggregation offers the ability to see in an instant the overall picture, which is ideal for those plan sponsors overseeing more than one plan The buyout module shows the approximate cost of winding-up a plan based on our experience of actual (historical) monthly insurer pricing Clear summary of financial position today Analysis of performance through easy to navigate tabs What if options to develop a strategy Figure 1. PC View Mercer FSM Pro Monitoring Module

5 2. SCENARIO ANALYSIS To fulfil their responsibilities, plan sponsors need a tool that can assess the sensitivity of the financial performance of the plan and can model that performance under changing conditions and scenarios. Assets, liabilities, P&L expense and cash contributions are projected for 30 years into the future and updated on a daily basis to allow for market movements (with a full reconciliation of assets and liabilities). Simple plan design changes can be modelled. Users can vary the key financial assumptions and expected cash flows to view their impact on the financial position and projections. Covers all recognised accounting standards, including treatment of unrecognised gains/losses for US GAAP) as well as any plan specific funding measure. One and three-year Value at Risk (VaR) decomposition is provided and users can view the impact of changing the asset mix. Figure 2. Mercer FSM Pro Forecasting Module Figure 3. Value at Risk de-composition

6 3. MANAGE Mercer FSM Pro is designed to be part of an effective governance framework that enables quick action in response to market conditions. Mercer FSM Pro can complement the development and monitoring of a pension risk road map, which plots your DB destination to full funding and reduces risk as the plan s financial health improves. Your DB destination plan could include the following elements: Glide-path investment strategy Pension risk transfer, via annuity buyout Hedging against risks such as inflation, longevity, and investment Mercer s experts can work with you to design and implement a road map as part of your overall governance framework including the use of other Mercer solutions such as Mercer Dynamic De-risking Solution (MDDS) and our award winning buyout platform, Mercer Pension Risk Exchange.

7 IMPORTANT NOTICES The calculations underlying Mercer FSM Pro are approximate and the results are not as accurate as those that would arise from a full actuarial valuation. No actions should be taken on the basis of results produced by Mercer FSM Pro without obtaining advice. No investment decision should be made based on this information without obtaining prior specific, professional advice relating to your own circumstances. HOW TO GET STARTED To find out how to implement Mercer FSM Pro for your plan or to arrange access to a demo version, please contact your local consultant or: ED BIRLEY +44 (0) edward.birley@mercer.com Mercer retains all copyright and other intellectual property rights in this document. This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided by Mercer. Its content may not be modified, sold, or otherwise provided, in whole or in part, to any other person or entity without Mercer s prior written permission. EMMET McCABE +44 (0) emmet.mccabe@mercer.com References to Mercer shall be construed to include Mercer Limited and/or its associated companies. Mercer Limited is authorised and regulated by the Financial Conduct Authority. Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU

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