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Power 100: Bob Hunkeler, CIO of International Paper

Bob Hunkeler, CIO of International Paper
 is on CIO’s 2018-2019 Power 100 list

On Cutting Pension Risk

Robert Hunkeler, chief investment officer of International Paper ($33.9 billion), runs a tight ship investing on behalf of the firm’s pensioners. In order to keep up with the markets, he is constantly thinking of new ways to innovate and obtain alpha. 

We were able to catch up with the institutional investor to talk his recent accomplishments, get a glimpse of his future objectives, and his thoughts on some of the industry’s top challenges.

What are some of the recent accomplishments you are most happy to have achieved as a CIO?

Hunkeler: On the DB side, it’d have to be cutting our pension risk by two thirds over the past three years.  We did this by spinning off over $4 billion in pension liabilities, investing $2.75 billion in new contributions, implementing a significant shift in our asset allocation, and increasing our interest rate hedging ratio to 75%.  On the DC side, we recently added a long bond option to our investment line-up and launched the Hueler Income Solutions annuity platform.  Both were designed to improve our participants’ retirement spend-down outcomes, which I hope will also encourage more of them to stay in our plan.

CIO: Are there any key goals you are looking forward to in the near future?

Hunkeler: One of my key goals is to prepare my team to take over when I’m no longer running the IP plans.  I’m fortunate to have a very talented group of individuals who are ready, willing and able to take on this task.  I just hope to make the transition as smooth as possible.

CIO: What are some of the key challenges the industry faces?

Hunkeler: The biggest challenge is the shift from DB to DC.  DB plans are retreating faster than I would have predicted just a few years ago.  At the same time, there’s a question about how committed corporate sponsors will be to their 401(k) plans going forward.  CIOs will have to work harder in the future to maintain the same kind of relevance they commanded in the past.

CIO: What aspects about the future of the industry do you find most promising and exciting?

Hunkeler: DC plans are alive and well.  Many companies like ours are innovating to bring new and exciting ideas to their participants.  At the same time, corporate DB plans, while on the decline, are still the most financially sound source of retirement income in the world; and they have long tails.  So, there’ll still be a lot to do with them for some time to come.  Finally, I take great comfort in knowing that no matter what happens, there’ll always be a need for people who know how to manage large pools of money.

Want to join in on the conversation? Put your questions for Hunkeler below in the comments section.