Articles - The competitive pension plan


A large corporation asked Milliman to help reassess its pension plan investment strategy. At the time, the client maintained a traditional policy: 70% equity and 30% fixed income. While common, this strategy allowed for significant tracking risk between the plan's assets and liabilities, leaving investors vulnerable to declines in interest rates and increases in liabilities. To mitigate this risk, the company wanted to fully fund its plan and lock it away. Instead, Milliman suggested an approach that would better align the company's assets with its liabilities. This liability-driven investment (LDI) strategy would enable the company to gain sufficient assets to meet all of its liabilities, both current and future. Now, the value of liabilities tracks the value of assets as interest rates rise and fall, and the plan's funded status remains stable. This approach is especially useful in light of new laws like the Pension Protection Act of 2006, which requires that plans be fully funded.

 

Back to Index


Similar News to this Story

Asset-backed securities: a growing opportunity for investors
From early 2027, the European Union’s (EU’s) Solvency II reforms will significantly improve the capital treatment of asset-backed securities (ABS).
Why pensions still go missing in divorce settlements
For specialist divorce lawyers, the importance of properly addressing pension assets is now widely understood. Whilst efforts have been made to raise
Active portfolio management: Why active insurers are fitter
Amid the noise generated by each day’s operational activities, how can insurers be confident they’re on track to achieve their strategic goals? The sh

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.