Russell Pension Report 2007 Forecasts a Significant 'Breaking Up of the Herd' (Russell.com)

Russell Pension Report 2007 Forecasts a Significant 'Breaking Up of the Herd'
Response to Pension Reform Will Vary Dramatically as Corporations Find Their Own Blend of Return-Seeking and Liability-Matching Strategies

Tacoma, WA — February 12, 2007 — Russell Investment Group has predicted a drastic change in pension investment portfolios as corporations respond to pension reform and try to maximize returns while matching liabilities. According to the recently released Russell Pension Report 2007, a report that offers insight into the current state of pension provision in America, corporate pension plans are more likely than ever to pursue unique objectives and asset allocation strategies.

"Changes in pension policy are being driven by a variety of pressures, and these pressures are going to push different plans in different directions," said Bob Collie, director of strategic advice at Russell and contributing author of the Russell Pension Report 2007. "There will be a breaking up of the herd as organizations pursue a wide range of both liability-matching and return-seeking strategies, driven by different responses to recent pension reform and by increasingly diverse corporate objectives."

The Russell report speculates that some defined benefit plans might turn to swap contracts to manage interest rate exposure while others might abandon their traditional caution and adopt more aggressive strategies such as long-short investing and global tactical asset allocation. Regardless of which strategy or combination of strategies companies ultimately choose, the ability of plans to employ both return-seeking and liability-matching strategies is now more feasible and necessary than ever before, a finding that challenges the traditional presumption that the two investment strategies are mutually exclusive.

"Today's environment offers a greater potential for separating the allocation decisions, making the pursuit of both liability-matching and risk-seeking not only preferable but entirely possible," said Robert Blackwell, managing director of research and strategy at Russell and contributing author of the pension report. "Corporate pension plans can successfully navigate the risk spectrum between liability-matching and return-seeking without compromising either goal."

The Russell Pension Report 2007 provides a glimpse of the key issues facing pension plans and provides insights into potential solutions for organizations. In addition to summarizing the current defined benefit landscape, the report includes an overview of the principles of liability-matching and return-seeking (as well as special considerations for frozen plans) and a look at the Russell Road Map, Russell's framework for planning a forward-looking, integrated, ongoing agenda for pension plans.

The Russell Pension Report 2007 is available at www.russell.com/pensionreport or by contacting 800-426-7969.

About Russell
Russell Investment Group, a global leader in multi-manager investing, provides investment products and services in more than 44 countries. Russell manages more than $195 billion in assets for advisory clients as of December 31, 2006. In 2007, and for the sixth time since 1999, Russell is ranked among the Fortune Magazine's 100 Best Companies to Work For in America.

Contacts:
Jennifer Tice, 253-439-2921
Matt Burkhard, 718-875-2122

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.

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First used: February 2007