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

Pensions governance and why it matters more than ever
Pensions have long been part of a school’s remuneration package. For teachers, this has historically been via the Teachers’ Pension Scheme (‘TPS’),
Health insurers utilising analytics for profitable growth
How can you boost ROI by embedding analytics into new product design, new business strategies and pricing approaches? Rising disease burdens and aging
Pensions dashboard is coming what should corporates expect
The pensions dashboard is expected to be available to the public later this year. This will be a major moment for UK retirement saving, changing how e

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.