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Pension Solutions

Overview


The GSAM Pension Solutions Group works closely with our clients to help them achieve their individual funding and investment goals. We offer clients a view of their challenges through a different lens, based on Goldman Sachs’ proprietary analysis and an experience-set gained from working with some of the largest institutions globally.

Whether managing a journey to self-sufficiency or settlement; employing a cash flow driven investment strategy; or managing the interest rate exposure of global fixed income assets; the Pensions Solutions Group has the expertise to help you get to where your scheme is going.

Our Philosophy


Every pension scheme has unique investment goals and risk objectives
We work directly with trustees, investment committees, actuaries, custodians and consultants to understand their pension ‘end game’, delivering customised pension solutions ranging from traditional long duration fixed income strategies to full and partial fiduciary management solutions.
Dedicated resources are key to helping pension schemes navigate evolving market environments
In today’s complex market and regulatory environment, we understand the continued need for innovative investment solutions and implementation expertise. Through our Pensions Solutions team, our clients can leverage the knowledge and expertise across Goldman Sachs and apply this directly to their specific investment needs.
A robust risk management strategy is critical
We can develop a risk management strategy based on a client’s stated objectives, leveraging sophisticated risk analytics and portfolio monitoring tools that provide our clients transparency and oversight throughout the investment process.

Our Approach: How We Partner With Clients


We partner with corporate defined benefit plan sponsors to navigate shifting dynamics that impact both their existing asset allocation and long-term investment strategies. We aim to assist global pension plans in navigating these multi-faceted dynamics, with a holistic view of each pension plan.

Holistic Approach to Pension Management
+

Assist fiduciary committees in better understanding the impact of their decisions on the sponsor’s overall balance sheet.

Risk Management
+

As liability management becomes a priority for the plan, our liability strategists and proprietary analytics can help plans manage toward end-game solutions.

Financial Markets
+

GSAM’s global team provides access to expertise across financial markets and instruments.

Regulatory Environment
+

Our dedicated pension strategists can help plans navigate a changing regulatory environment.

Key Differentiators


Deep bench of expertise

We draw on specialized experts including actuaries, risk managers and strategists. We also engage investment professionals spanning asset classes, including credit and rates teams with, on average, over a decade of experience.1

 

Holistic implementation approach

We take a holistic approach to portfolio management and provide tailored investment strategies, with a highly curated investment approach and fiduciary mindset.

Strategic insights and knowledge transfer

We address our clients’ key challenges and provide timely insights on a variety of topics relevant to the pension landscape, including real-time viewpoints on market and regulatory changes, liability management perspectives and corporate finance.

 

Extensive risk management

To directly align our investment process with a client's objectives, we leverage sophisticated analytics and dynamic portfolio monitoring that provide our clients with oversight throughout the investment process.

 

Current Trends


Below we have summarised some of the current challenges UK DB schemes we are working with are facing, setting out how we are working in partnership with them to provide robust solutions to help them achieve their investment objectives.

Our Approach: How We Partner With Clients


We partner with corporate defined benefit schemes to navigate shifting dynamics that impact both their existing asset allocation and long-term investment strategies.

 

Holistic Approach to Pension Management
+

Assist trustees in translating their strategic investment objectives into specific investment solutions including robust risk oversight and monitoring.

Financial Markets
+

GSAM’s global team provides access to expertise across financial markets and instruments.

Risk Management
+

Managing risk effectively is critical. Our pensions experts and proprietary analytics can help schemes manage asset and liability risks along the path to end-game solutions.

Regulatory Environment
+

Our dedicated team can help schemes navigate a changing regulatory environment.

Our Process


1
Analyse and Diagnose
Scheme specific considerations, including:
  • Long-term goals and funding objectives
  • Investment objectives
  • Scheme size and funding level
  • Liability sensitivities and cash flow needs
2
Construct and Implement
Bespoke portfolio solutions through:
  • Delegation of implementation decisions and professionalisation of portfolio management process
  • Custom liability benchmarks and liability hedging portfolios
  • Custom fixed income portfolios designed to meet individual scheme objectives
  • Blending GSAM and external managers where appropriate
3
Monitor and Manage
Portfolio solutions, using a proprietary, fully integrated risk management system, including:
  • Risk exposures based on evolving market dynamics
  • Focus on underlying drivers of risk and return
  • Clear, consistent performance attribution
  • Partnership approach to engaging with our clients

Examples of Our Partnership with Clients


 

 

 

 

Client Description

Large UK Corporate DB Pension Scheme

 

Client Objective

The objective of this client was to construct a portfolio with attractive risk-adjusted returns that generate reliable income, predominantly through corporate credit, managed on a ‘buy-and-maintain’ basis. The portfolio seeks to partially match asset cash flows proportional to the initial investment size and the client’s cash flow profile between 10 and 30 years. Over time the expectation is to increase the investment size to more closely match the full liability profile as the scheme’s overall funding level improves to meet a higher proportion of the expected cash flows.

 

 
 
 
 
 
GSAM Solution

A portfolio that uses GSAM’s proprietary cash flow matching technology to search the global universe for appropriate assets and assess credit quality to build suitable model portfolios which are reviewed, analysed, refined and implemented by the portfolio management team.  

 

 

 
 
 
 
Client Description

The Trustees of a multinational pension scheme decided to adopt full fiduciary management in place of a traditional consulting led model.

 

Client Objective

The objective of this client was to maximise the benefits of a significant sponsor contribution through access to the full spectrum of portfolio management capabilities on a discretionary basis (asset allocation, tactical nimbleness, robust liability risk management).

 

 
GSAM Solution

Initially GSAM’s engagement with the Trustees was focused on high level strategic decisions including:

  • Significant initial and ongoing Trustee education – group and individual sessions
  • Focus on long-term objectives resulting in agreement of a “Journey Plan” against which performance can be monitored. This outlines the Trustees funding goal and time horizon in which to get there and defines a customised investment strategy and funding-level driven de-risking program designed to meet these objectives.

Since implementation the revised strategic asset allocation has:

  • Reduced funding level volatility as a result of LDI allocation, adding significant value in turbulent UK markets
  • Driven strong returns from a broad set of return-generating assets with low realised volatility
  • Maintained returns whilst providing capital for an Enhanced Transfer Value exercise which resulted in a ~10% of assets outflow

 

 

 

 

Client Description
Large UK Corporate DB Pension Scheme

 

 

Client Objective

To build a customised portfolio of alternative risk premia, within maximum acceptable ex-ante volatility and equity beta limits.

 

 

GSAM Solution

Within the volatility and beta constraints provided by the client, and using our proprietary framework based on market risk-factors (as opposed to asset classes) we have built the client a diversified portfolio of alternative risk premia.

As well as being a well diversified stand alone allocation with an attractive sharpe ratio, this portfolio has been successfully diversifying the client’s overall return-seeking portfolio, which has a strong structural bias to equity and credit beta through private markets. This allocation also offers the client high (daily) liquidity in contrast to their substantial private market holdings, which is a key benefit in their day to day scheme management.

Key Differentiators


Deep expertise

We draw on specialised experts across GSAM including actuaries, portfolio managers and strategists. We also engage investment professionals spanning asset classes, including credit and rates teams with, on average,
over a decade of experience.

Holistic implementation approach

We take a holistic approach to portfolio
management and provide tailored investment strategies, with a highly curated investment approach.

Strategic insights and knowledge transfer

We address our clients’ key challenges and provide timely insights on a variety of topics relevant to the pension landscape, including real-time viewpoints on market and regulatory changes, liability management perspectives and industry developments.

Extensive risk management

To directly align our investment process with a client's objectives, we leverage sophisticated analytics and dynamic portfolio monitoring that provide our clients with oversight throughout the investment process.

 

Awards


Related Insights


November 2018

UK DB Schemes: Time to Go Global

July 2019

US Corporate Pension Mid-Year Update: Eyeing the Exit

July 2019

Governing Cash Flow Driven Portfolios: The questions are as important as the answers

June 2019

Waxing Life Expectancies, Waning Return Assumptions

May 2019

US Corporate Pension De-Risking: More Than Just Bonds