Companies in the UK are confronted with a range of difficult decisions regarding the management of their pension schemes.

As equity markets have continued to perform below expectations, as interest rates have fallen to historic lows, and as people live longer lives - requiring larger total pensions from their employers - many schemes have moved into deficit.

With the introduction of new UK and international accounting standards, many companies now have to report annually any pension fund deficits on their balance sheets, creating extra pressure for managers.

Managing the risks that reduce the value of pension assets and increase liabilities has become imperative.

Critical questions you need to consider

• Are you confident that you can make a considered decision on the right mix of equities and bonds in your pension investment portfolio? How have you defined your 'risk tolerance'?

• Have you assessed the risks posed by interest rate movements and evaluated the potential hedges?

• Have you assessed the impact of salary inflation on your liabilities?

• Are you confident in your forecast of mortality risk?

• Do your administration and governance practices meet best-in-class practices? Have you considered benchmarking in this area?